California Got Sacked by Power Companies, But That's How the Game Is Played
The Washington Post, 05/08/01

Enron May Buy U.K. Plants to Lift Profit, Reduce Risk (Update1)
Bloomberg, 05/08/01

Scottish Power Streamlines Its Focus --- Uncertainty Over Water Unit, Telecom 
Venture Clouds U.K. Utility's Future --- `We Have a Reasonably Low Opinion of 
the Company'
The Wall Street Journal Europe, 05/08/01

INDIA: Enron India unit lenders move to solve row-papers.
Reuters English News Service, 05/08/01

India: Tackling the power mess
Business Line (The Hindu), 05/08/01

India: Enron: Indian lenders threaten to move court
Business Line (The Hindu), 05/08/01

Northern Border completes Midwestern Gas buy
The Daily Deal, 05/08/01

Customs blocks Rs 300cr equipment of DPC
The Times of India, 05/08/01

BP Amoco Considers Natural-Gas Terminal in Tampa, Fla.
KRTBN Knight-Ridder Tribune Business News: St. Petersburg Times - Florida, 
05/08/01

Enron could supply universities with state-subsidized power
Associated Press Newswires, 05/07/01

USA: Northern Border Partners buys Midwestern Gas.
Reuters English News Service, 05/07/01

Enron Confirms DPC's Meet With Indian State Panel May 11
Dow Jones International News, 05/07/01


Financial
DEALS Allan Sloan
California Got Sacked by Power Companies, But That's How the Game Is Played
Allan Sloan

05/08/2001
The Washington Post
FINAL
E03
Copyright 2001, The Washington Post Co. All Rights Reserved

In football, "piling on" a player who's already been tackled means a major 
penalty that can set your team back a long way. But when it comes to markets, 
piling on by taking advantage of the weak is called "opportunism," and it can 
get you a big bonus. 
Which brings us to California, where piling on enfeebled utilities and 
customers by power generators and power traders has become a way of life. 
Thanks to the idiotic way that California deregulated its electricity 
markets, the generators and traders of power in the state have been making a 
fortune because electricity costs have gone through the roof. Meanwhile, 
consumers are getting pounded rather than protected, economic instability is 
spreading throughout the western United States and some of the utilities that 
distribute power are getting clobbered. One big utility, Pacific Gas & 
Electric, has already gone broke, and others may soon follow.
But while the market has produced a horde of losers -- California's wholesale 
power bill is running at 10 times the level of two years ago -- there are 
some big winners: companies that generate or trade power in the California 
market. Among the winners: Calpine, whose first-quarter profit quintupled 
compared with last year's; Reliant Energy and Williams Cos., whose profits 
more than doubled; Mirant, up 84 percent; and Dynegy and Duke Energy, whose 
wholesale power profits doubled and quadrupled, respectively. Enron, the 
nation's biggest energy trader, had a 75 percent increase in 
wholesale-services profits, but it says little of that was from California. 
Some of these companies' profits would have risen far more -- Mirant's would 
have quadrupled -- had they not taken big earnings hits to cover the risk of 
not being paid for some of their California sales. If they finally get paid, 
their profits will be outta sight. You can see why some of these companies' 
stocks have heated up as California melted down. 
To be fair, you can't attribute the entire increases to California -- but you 
can be sure California accounts for a good portion of them. There are other, 
less obvious winners, too. Among them: the unregulated subsidiaries of some 
companies that own California utilities; aluminum producers that are making 
more money by closing their plants and selling their power allotments than 
they would have made by producing aluminum; farms that find it more 
profitable to resell electricity than to grow crops; and, in general, anyone 
in the western United States or Canada with an electron to spare and some way 
of getting it into California. 
I'm not saying that these companies are immoral for making a fortune by 
taking advantage of California's problems. Breaking the law by creating an 
artificial shortage -- which has been alleged, but not remotely proven -- 
would be immoral. Taking advantage of a situation? That's what's known as 
amoral -- having no moral values, either good or bad. It's not nice, but it's 
perfectly legal, and it's the way market players are expected to act. 
So when California Gov. Gray Davis said last week that he was planning to 
have a "heart-to-heart" talk with California power generators, you just had 
to laugh. Because when it comes to business, those people have no hearts. 
They're not supposed to. 
What created the problem in California is not only deregulation, but a stupid 
deregulation plan carried out ineptly: the Kilowatt Keystone Cops, as it 
were. California put a cap on the rates that utilities could charge 
customers, but until recently it forced utilities to buy all of their power 
in the short-term market. The utilities foolishly agreed to this deal. The 
problem: Short-term markets are notoriously volatile. And notoriously 
ruthless. If there's a small surplus of power, you have desperate sellers 
trying to sell electricity, which can't be stored. But if there's a shortage, 
everyone piles on. Had California utilities been allowed to do the rational 
thing and buy most of their power in long-term markets, they would have paid 
more initially, but they and their customers would be in far better shape 
now. Compounding the problem is that while the state deregulated the 
wholesale rates the utilities paid for power, they capped the retail rates 
utilities could charge. Combine that with total reliance on the short-term 
market and -- voila! -- you're totally at the market's mercy. And markets 
have no mercy. 
In the old days, when utilities were regulated, there was often waste and 
inefficiency, but power was reliable and utilities cared desperately about 
keeping the lights on. Now, we have markets that don't care about anything. 
Someday, markets may give us total reliability at a cheaper price than 
regulation would. But in the meantime, get used to the piling-on concept. 
Just hope you end up on top of the pile. 
Kevin Peraino contributed to this column. 
Sloan is Newsweek's Wall Street editor. His e-mail address is sloan@panix.com.

http://www.washingtonpost.com 

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


Enron May Buy U.K. Plants to Lift Profit, Reduce Risk (Update1)
2001-05-08 04:59 (New York)

Enron May Buy U.K. Plants to Lift Profit, Reduce Risk (Update1)

     (Adds background on trading system in fifth paragraph.)

     London, May 8 (Bloomberg) -- Enron Corp., the world's biggest
energy trader, may consider bidding for U.K. power stations to
reduce its risk in trading and make more money from swings in
electricity prices, an executive said.
     Enron is vying with European and U.S. rivals for dominance in
U.K. electricity trading, a market worth about 7.5 billion pounds
($11 billion) a year. Edison Mission Energy and TXU Corp. have
both said they may sell power stations in the U.K.
     Under a new system of electricity trading introduced in
England in March, a company unable to deliver power to a customer
as agreed must buy it on the market. The fluctuation in prices
offers companies such as Enron and U.K. rivals Powergen Plc and
Innogy Holdings Plc gains or losses of as much as 1,000 percent.
     ``A physical power station can put bids and offers into the
balancing mechanism,'' said Richard Lewis, managing director of
Enron's U.K. power and gas, in an interview. ``There is high
volatility to extract there and that is valuable. We look at all
opportunities.''
     The regulator, Ofgem, hopes the new trading system will
increase competition in the electricity market. Under previous
rules, companies weren't penalized if they didn't deliver.
     Prices for electricity in the spot market, or the so-called
balancing mechanism, have varied from 1,036 pounds a megawatt hour
to a negative 434 pounds a megawatt hour when there is excess
supply, said Elexon Ltd., which administers the new U.K. trading
system, on its Internet site.

                      Power Trading

     When the price of power is negative, the trading system
effectively pays companies to reduce generation. If a 200 megawatt
power station breaks down, and prices in the spot market reach
1,000 pounds a megawatt hour, the station's owner will have to pay
200,000 pounds an hour to meet its supply obligations.
     Owning power stations would allow Enron to meet its
obligations by boosting generation at the plant rather than by
purchasing electricity on the market. The company could also boost
output at times when prices are surging, lifting profit.
     Companies owning a single power station, or companies that
generate electricity from sources such as wind, are more prone to
interruptions and provide Enron with possible customers for risk
management products to guard against power failures.
     ``There is huge potential for aggregation of small
generators,'' Lewis said. ``The provision of risk management is
going to be more in demand. This is an opportunity for us to
provide services.''

                         For Sale

     In the U.K., Enron employs 13 traders on its London-based
electricity desk. The company controls 51 power plants worldwide,
and other energy projects in 15 countries on four continents. In
the U.K., it owns a 50 percent stake in Teesside Power Station, in
the northeast of the country.
     Among U.K. generation assets that may be sold are the
Fiddler's Ferry plant in Cheshire and the Ferrybridge station in
Yorkshire, each capable of producing enough power to light 2
million homes. Edison Mission, a unit of Edison International, has
said it may sell the stations to focus on its U.S. business.
     U.K. electric utilities are seeking to make money from
trading amid waning profit from their main generation and supply
business. The price of generation in the U.K. has tumbled with
that of wholesale electricity. Wholesale prices dropped 15 percent
in the year to March 27, according to regulator Ofgem.
     Other companies that may bid for the Edison assets include
U.S. rival Duke Energy Corp., Electricite de France and RWE AG,
Germany's biggest power company, the Sunday Telegraph newspaper
reported March 16.


European Markets
Scottish Power Streamlines Its Focus --- Uncertainty Over Water Unit, Telecom 
Venture Clouds U.K. Utility's Future --- `We Have a Reasonably Low Opinion of 
the Company'
By Andrea Chipman
Dow Jones Newswires

05/08/2001
The Wall Street Journal Europe
12
(Copyright (c) 2001, Dow Jones & Company, Inc.)

LONDON -- After more than a year of lagging earnings, investment missteps and 
unexpected disasters, U.K. utility Scottish Power PLC is hoping a new 
strategy to streamline its businesses will signal a more focused period for 
the company. 
But it has got its work cut out for it. While investors were cheered by news 
that its Utah-based Hunter power plant is back online after a six-month 
outage that cost the company an estimated $160 million (178.9 million euros), 
uncertainty over its plans for its Southern Water unit and apparent 
commitment to Thus, an unprofitable telecommunications venture, are seen as 
muddling the group's focus.
"It all adds up -- the lack of coherent strategy, quite substantial 
downgrades and a whole host of noncore businesses that they don't have any 
natural management flair or expertise in," said Brian Gallagher, a senior 
fund manager at London-based Gartmore Investment Management, which has GBP 3 
million (4.8 million euros) of Scottish Power shares in its Global Utilities 
Fund. "We have a reasonably low opinion of the company." 
The company said its pretax profit before goodwill amortization and 
exceptional items for the year ended March 31 fell 15% to GBP 628 million 
from GBP 736 million the year before. Adjusted earnings per share declined 
26% to 30.65 pence from 41.22 pence. 
The company acknowledged profits have been hit hard by the Hunter outage, 
competition on wholesale and retail markets in the U.K. and strict price 
controls on its regulated infrastructure businesses. 
The company's shares are currently trading at 443.25 pence each, down 17% 
from 533 pence each a year ago. 
Executives say they are restructuring the business into three targeted 
divisions to capitalize on its traditional strengths in generation and power 
supply and infrastructure and to expand its overseas activities. 
"We've now got a trading and commercial link between generation and supply 
and the first thing we are doing is putting emphasis on that . . . on growing 
earnings across that value chain," said Scottish Power's chief executive, Ian 
Russell. "In the U.S., we are focused on cost cutting and on acquiring new 
businesses." 
Scottish Power's move away from a full multiutility profile -- begun last 
year with its partial disposal of Thus and its withdrawal from an Internet 
banking venture with Royal Bank of Scotland -- toward a more narrowly focused 
energy business mimics a trend across the industry toward greater 
specialization. 
The company is also considering selling Southern Water, which would allow it 
to focus even more closely on its power business. 
Yet analysts and investors say they are looking for more details of the 
company's overall growth strategy from Mr. Russell, who took over as chief 
executive last month, and other managers. The toll from months of drift, is 
evident, they said. 
Indeed, despite its efforts to chart a new road, Scottish Power appears to be 
reluctant to acknowledge the failure of some of its noncore ventures. 
Mr. Russell said his company remains "supportive" of Thus, which reported an 
annual loss of GBP 21.4 million this week, and has no plans to unload its 
remaining 50% stake in the company. 
Similarly, he said, Scottish Power hasn't yet made a final decision to 
dispose of Southern Water -- which has cut costs under its Scottish parent 
but is increasingly unable to cover its capital expenditure -- although he 
said the company had received "a number of offers" from potential buyers. 
Although he declined to identify any of the bidders, Italian energy company 
Enel SpA has confirmed its interest. 
People familiar with the industry said a prompt sale of the water unit looks 
likely, with some bids already exceeding the GBP 2 billion at which many 
analysts value the company's combined assets and debt. It is unclear, they 
said, how Southern Water or Thus would fit into Scottish Power's new image. 
"Scottish Power sees itself as an international energy company," a person 
familiar with the company said. In a year's time, he added, "it would be 
unlikely that Southern Water and Thus would be part of the company." 
Revenue from the sale of the water unit would also help Scottish Power pursue 
its U.S. expansion without extending its 90% debt-to-equity ratio, analysts 
and investors said. 
Mr. Russell declined to comment on reports Scottish Power is considering 
buying Enron Corp.'s Oregon-based unit, Portland General, but admitted the 
company would be a logical geographical fit with its Pacificorp subsidiary. 
Analysts said Scottish Power's plans for U.S. growth is likely to be a key 
part of its energy strategy. 
"We like their U.S. strategy, where they've leveraged expertise gained in the 
highly competitive U.K. market," said Gareth Lewis-Davies, head of utilities 
research at Lehman Brothers in London. 
Closer to home, competition and the trend toward increased specialization in 
the power industry may force Scottish Power to determine whether its business 
strength lies in asset management or retail and generation. 
"Strategic decisions need to be made, and I'm not sure if they are going to 
make them in the near term or not," said Andrew Wright, U.K. utilities 
analyst at UBS Warburg in London. "They are pretty much involved across the 
value chain, and I think it remains to be seen which part of the value chain 
they specialize in, if any."

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


INDIA: Enron India unit lenders move to solve row-papers.

05/08/2001
Reuters English News Service
(C) Reuters Limited 2001.

BOMBAY, May 8 (Reuters) - Lenders to U.S. energy giant Enron Corp's troubled 
Dabhol Power Company (DPC) project in India may cut interest rates on almost 
$2 billion of loans to prevent default, business dailies said on Tuesday. 
Indian and foreign lenders are willing to help DPC produce power at cheaper 
cost, but would not hesitate to sue if the stand-off between the government 
and DPC continues, the news reports said.
Enron's $2.9 billion project is mired in controversy after the Maharashtra 
State Electricity Board (MSEB) reneged on its commitment to buy all the power 
produced by the giant plant, saying it is too costly. MSEB has also defaulted 
on monthly payments to DPC for the electricity it has taken, forcing the 
company's board last month to authorise the management to terminate the 
contract. 
That possibility casts a long shadow over the fate of the project's 1,444 MW 
second phase, which is scheduled to start commercial operation next month. 
The 740 MW first phase began operating in May 1999. 
"All lenders, both Indian and offshore, want to see the second phase of the 
project taking off. We may cut the rates if there is any formal request from 
either DPC or the government," the Economic Times quoted an unnamed banking 
source as saying. 
Five Indian financial institutions have lent a total $1.4 billion to the 
project. The five are the Industrial Development Bank of India , State Bank 
of India , the Industrial Finance Corporation of India , ICICI Ltd and Canara 
Bank. 
The lenders are now working overtime to resolve the issue. Last week they 
sent a letter to the Indian finance ministry asking it to clear up $48 
million in unpaid bills owed to Dabhol. 
But the Business Line newspaper reported the banks may take legal action if a 
quick solution is not found. 
"Our money is caught between two feuding parties....If they continue their 
hawkish stand, we will have no other option but sue the company, MSEB and the 
government," the paper quoted an unnamed banking source as saying. 
The dispute has already damaged India's image as a safe destination for 
foreign investment. 
It suffered another blow on Tuesday when the Times of India reported that 
customs officials in Bombay have blocked DPC's imports of project equipment 
due to a dispute over tax rates. 
($1=46.80 Indian rupees).

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


India: Tackling the power mess

05/08/2001
Business Line (The Hindu)
Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - 
Asia Intelligence Wire

AFTER over a decade of reforms in the power sector, nothing much has changed 
for the better. On the contrary, the situation appears to have only worsened 
further. 
Ten years ago, the power outages - or load shedding as better known - in the 
Capital for a couple of hours in rotation only in summer during the peak 
hours used to be pre-announced. A decade through reforms and Delhiites have 
now accustomed to subsisting without electricity not only in peak summer for 
anything between seven and 14 hours during the day but also for a couple of 
hours in winter.
This summer is turning out to be no different. Rotational load shedding for a 
good six to seven hours in most areas during both night and daytime have 
already started which shows that there is both energy and peaking shortage in 
the Capital. And, if this is the situation in Delhi - the country's so-called 
cosmopolitan pride - the fate of the hapless citizens in the other scorching 
States in the north can well be imagined. 
So, what have the power reforms achieved? Precious little. It's the people, 
and not the politicians, who have come to realise that quality power, like 
any other commodity, is to be paid for. This apart, scores of manhours have 
gone into deliberations on power reforms, numerous policy guidelines have 
been laid down, while the only people laughing all the way to the bank have 
been the power conference organisers. 
At the outset itself when reforms in the power sector were being ushered in, 
various sector-specific organisations, including the National Group on Power, 
as well as the media, had amply warned the various authorities, both at the 
Centre and in the States, that the path they were treading on would turn out 
to be counter-productive. For the simple reason that neither foreign nor 
private investment would venture into power generation for purposes of 
charity. On the contrary, the activity being capital- intensive, they would 
like to have assured returns as also ensure that the State electricity boards 
pay up. 
The authorities, in their zeal and drive to ensure that the reforms worked, 
paid little heed to making the SEBs bankable. And instead, the Centre was in 
a way duped to providing counter-guarantees for payment for a host of 
projects that were lined up through the memorandum of understanding (MoU) 
route. As long as the SEBs are utilised as pawns and electricity is supplied 
free to certain sectors for garnering votes, private investors will continue 
to demand guarantees such as escrow cover. 
Agreeing to that, again, is one of the surest way of choking the SEBs 
further. A classic example is the case of the Maharashtra State Electricity 
Board (MSEB) which was once one of the better SEBs financially. Despite 
repeated adverse criticism, Enron's Dabhol project was hung around MSEB'S 
neck like an albatross and the consequences have now surfaced for all to see. 
It is now that the authorities appear to have wisened up to the whole issue 
and escrow cover to Reliance's Patalganga and Ispat's Bhadravati projects are 
now being denied as the SEB cannot afford them. 
A late realisation, but better late than never. The pity is that all these 
years, the authorities had banked on private and foreign investors to make up 
for the power shortage and the public sector investment tap was literally 
turned off as a matter of policy, an act which Dr Manmohan Singh as the then 
Finance Minister had himself admitted, was faulty. 
It is time that the authorities reverted to the earlier policy of adding coal 
or gas-based generating capacity in the public sector while simultaneously 
restoring the SEBs back to health. Only then can private investment 
supplement the effort. 
- Ashok Dasgupta

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


India: Enron: Indian lenders threaten to move court

05/08/2001
Business Line (The Hindu)
Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - 
Asia Intelligence Wire

MUMBAI, May 7. INDIAN lenders to Dabhol Power Company (DPC) will not hesitate 
to drag all parties concerned - DPC, MSEB, and the Governments - to the court 
if the stalemate continues. 
"Our money is caught between two feuding parties. One (Enron) is saying that 
it does not agree with the terms of reference of the Godbole panel. The other 
(MSEB) says it cannot buy power from DPC unless offered at a lower rate. If 
these two continue their hawkish stand, we'll have no other go but sue the 
company, MSEB, and the Governments," institutional sources said.
Even though the IDBI-led consortium is "hopeful" of getting all concerned 
across the table, and talking, top officials admit that it is quite an uphill 
task. Sources told Business Line that the lenders will do everything in their 
power to find an amicable solution to the issue. The lenders are also trying 
to persuade the Union Government to play a more "active role." 
Informal talks are going on regularly between DPC, its lenders and 
shareholders. Since domestic lenders are the ones who stand to lose the most, 
they are working overtime to persuade everyone involved to amicably arrive at 
a viable settlement. 
The State Government agrees with this stance of the lending institutions. 
"Indian lenders can go to court to recover their dues," a senior State 
Government official said. 
"Foreign lenders are covered by the Union Government counter-guarantee and 
various other guarantees by the Indian financial institutions. So, a burden 
of over Rs 6,000 crore will fall on the Indian institutions. It is 
understandable if they say they will pull us to court," he said. He, however, 
insisted that it was a remote possibility. 
The official expressed concern over the Union Government's delay to nominate 
a representative for the negotiation process. The State Government, has 
selected Mr Quinton Loh, a Chinese lawyer, to represent it for arbitration 
while MSEB has appointed Mr M.L. Pendse, a former Mumbai High Court judge, he 
said. 
Enron had issued the Centre a notice of negotiation on April 4. "The process 
(negotiation) has to be completed within 60 days. A month has gone by and the 
Centre has not yet begun the process of negotiation," the official said. 
The State is, however, waiting for a resolution of the Rs 401-crore rebate 
dispute between the State electricity board and DPC. "If the matter is 
settled and MSEB's claim, that DPC should pay them Rs 401 crore as rebate, is 
vindicated, DPC will be in no position to contest on any other ground. Even 
if they lose, the monies will have to be paid and the matter will be 
resolved," he said. 
Meanwhile, a senior MSEB official said that the board would have a strong 
defence as it has been regular in its payments to the DPC. 
Interestingly, if the lenders go to court, the two feuding parties - MSEB and 
Enron - will be on the same side slugging it out with the institutions. 
"The Indian lenders can pull us to court. But we have paid, albeit under 
protest, all DPC bills regularly, except for the disputed December and 
January bills," the MSEB official said. He, however, remarked: "If the 
lenders believe going to court is a faster way to recover their money..." 
- Dinesh Narayanan 
- Archana Chaudhary

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


InPlay
Northern Border completes Midwestern Gas buy

05/08/2001
The Daily Deal
Copyright (c) 2001 The Deal LLC

Williams Cos - Enron Corp. - Northern Border Pipeline Co. - El Paso Corp. - 
Midwestern Gas Transmission - Northern Border Partners LP 
Omaha pipeline operator Northern Border Partners LP said Monday it had 
completed its acquisition of Midwestern Gas Transmission from Houston natural 
gas transporter El Paso Corp. for $100 million. The purchase closed after the 
U.S. Federal Trade Commission approved it. Midwestern owns and operates a 350 
mile natural gas pipeline system extending from Portland, Tenn., to Joliet, 
Ill., with interconnections to seven major pipeline systems in the Chicago 
area, including the Northern Border Pipeline operated by Northern Border 
Pipeline Co., which is 70% owned by NBP. NBP's general partners are owned by 
Houston energy marketing giant Enron Corp. and Tulsa, Okla., natural gas 
company Williams Cos. -Claire Poole http://www.thedeal.com

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


Customs blocks Rs 300cr equipment of DPC
Vinu Lal

05/08/2001
The Times of India
Copyright (C) 2001 The Times of India; Source: World Reporter (TM)

MUMBAI: It's a never-ending tale of woes for Enron and this time the city 
customs has played the role. The Customs department has blocked import of 
equipment belonging to Dabhol Power Company citing differences in payable 
duty. Sources informed that till date, goods worth Rs 300 crore have been 
blocked by the department. 
The bone of contention arose when the Customs department started demanding 
normal project imports duties for DPC goods, which used to be imported at 
concessional rates. The department said that the equipment imports pertaining 
to liquefied natural gas terminal, which includes goods used for setting up 
storage tank and terminals, and are not used for generating power but for a 
commercial activity. Enron officials, however, declined to comment on this 
issue.
``For a power project which involves intra-state sale of electricity, project 
equipment can be imported at concessional duties which works out to 5 per 
cent customs duty and another 16 per cent counter-vailing duty. But if 
equipment imported is being used to set up a LNG terminal for commercial 
purposes and not for generating power then the duty structure works out to 58 
per cent,'' sources said. 
The Union ministry of power had given concessional import duties for 
attracting investments in power sector, if power is sold to other states, no 
duty is applicable. For Dabhol, being an intra-state project, the customs 
duty will be 5 per cent. 
DPC is setting up a 5 million tonnes LNG facility where only 2.1 million 
tonnes will be used for the Dabhol power project and the remaining capacity 
would be sold to other customers in the region. 
At present, the civil works are on for the entire capacity which include 
three storage tanks and terminal facilities. Works on two storage tanks are 
almost complete with a sizeable work left for the third tank and similar 
works pending for the terminal, which includes the regassification project. 
Though work on the site has been going on a slow pace due to the current 
controversy, this move will also have an adverse impact on the project 
completion, sources added. 
However, sources said that the company has been demanding concessional duty 
since the LNG project is not a separate project but clubbed with the power 
project and all other benefits, like taxes, are applicable to LNG project as 
well.

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


BP Amoco Considers Natural-Gas Terminal in Tampa, Fla.
Steve Huettel

05/08/2001
KRTBN Knight-Ridder Tribune Business News: St. Petersburg Times - Florida
Copyright (C) 2001 KRTBN Knight Ridder Tribune Business News; Source: World 
Reporter (TM)

TAMPA, Fla.--Energy giant BP is looking into shipping natural gas into the 
Port of Tampa, the latest plan in a race among global companies to supply 
more gas to the booming Florida market. 
An affiliate of BP has options to lease 60 acres at the tip of Hooker's Point 
for a terminal where ships three times the length of a football field would 
unload natural gas cooled into a liquid at minus 256 degrees Fahrenheit.
The project would include super-cooled storage tanks, a plant to heat the 
liquid fuel back into gas and a pipeline connecting to commercial customers, 
especially electric utilities that use gas-fired generators, the company 
says. 
Port director George Williamson says BP officials told him that the terminal 
would cost about $200-million and take at least four years to win approval 
from federal, state and local regulators. 
The company is considering several locations in North America, although Tampa 
is the only one disclosed so far, said BP spokesman Daren Beaudo in Houston. 
BP's study hasn't gone far enough to discuss construction cost estimates or 
other details, he said. 
BP paid the Tampa Port Authority $20,000 for a six-month option on the site 
and can extend the option another six months for $50,000 more. 
There are only two active liquefied natural gas terminals in the United 
States, although energy companies are working to get two others mothballed in 
1980 back into service. 
Four big energy companies, including BP, plan to build as many as seven new 
terminals in the United States, Mexico and the Caribbean, according to an 
April report by Salomon Smith Barney. 
That includes two terminals in the Bahamas designed to serve Florida. Enron 
wants to run a pipeline 90 miles that will come ashore in Broward County. El 
Paso Energy won't say how it would transport the gas to Florida. 
Forecasters at the state Public Service Commission estimate demand for 
natural gas will grow an average of 5 percent a year over the next decade. 
Energy companies and analysts say the growth could be twice that much. 
Driving demand is a bevy of new gas-fired power plants and conversions of old 
plants to run on the clean-burning fuel, said Michael Schmitz, an analyst 
with Salomon Smith Barney. Liquefied gas from Trinidad, Venezuela and 
elsewhere will be needed to augment gas piped from domestic fields, he said. 
"Many, many of these new power plants are natural gas-fired, and it's tough 
to see where the big uptick is going to come in U.S. production," Schmitz 
said. "The supply for Florida is as tight or tighter than the rest of the 
country." 
While liquefied natural gas makes up only 1 percent of the U.S. gas supply, 
it is widely used in Japan and Korea. 
BP and other companies say they've got an outstanding safety record in 
shipping and handling the material. 
Liquefied natural gas isn't combustible until it vaporizes and reaches a 
certain mixture with oxygen. The liquid isn't stored under pressure, so it 
doesn't leak quickly, BP spokesman Neil Chapman said. "It oozes," he said. 
Still, plans by Williams Gas Pipeline to reactivate its Cove Point terminal 
in Lusby, Md., has neighbors jittery. 
Schmitz thinks Enron and El Paso are building in the Bahamas to avoid tougher 
scrutiny from federal regulators and local opposition in South Florida. 
Spokesmen for the companies say various factors went into their decisions. 
Forecasters at the state Public Service Commission estimate demand for 
natural gas will grow an average of 5 percent a year over the next decade. 
The prospect of a terminal in Tampa doesn't alarm Peter Clark, executive 
director of Tampa BayWatch, an environmental group. 
He notes that ships in Tampa Bay hold a variety of hazardous cargos. Vessels 
must maintain a 1,000-yard "clear zone" from barges carrying anhydrous 
ammonia and propane. They aren't allowed to pass them in shipping channels. 
"It's a matter of being able to transport it in a safe manner," Clark said.

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


Enron could supply universities with state-subsidized power
By DAVID KRAVETS
Associated Press Writer

05/07/2001
Associated Press Newswires
Copyright 2001. The Associated Press. All Rights Reserved.

SAN FRANCISCO (AP) - Enron Corp., which was ordered last month to honor its 
contracts to supply power to California's public universities, has won a key 
appellate ruling that could cost taxpayers millions. 
A federal appeals panel said the Houston-based energy wholesaler could buy 
power for the universities from the state's investor-owned utilities, rather 
than buying it on the expensive "spot" power market.
Enron says it would save the company $12 million a month. But it means the 
state will have to spend more money buying electricity to supply the 
universities. Since January, California has already spent $5 billion buying 
electricity for the customers of three ailing utilities that will eventually 
be repaid by customers and taxpayers. 
In its Thursday ruling made public Monday, the 9th U.S. Circuit Court of 
Appeals overturned a federal judge's April decision that ordered Enron to 
directly supply power to most of the state's universities as part of a 
long-term agreement with them that expires in March. 
Where Enron buys that power makes a huge financial difference to the state 
under California's power deregulation rules. 
The state said it could spend - or Enron could save - up to $12 million a 
month. That's because buying last-minute power on the spot market, where 
Enron had been buying the schools' power, costs several times more than what 
the state can legally collect from ratepayers. 
Since January, the state has bought electricity for the customers of Pacific 
Gas and Electric Co., Southern California Edison Co. and San Diego Gas and 
Electric Co. in an attempt to keep them financially stable as power prices 
skyrocketed. 
The state has only been able to retrieve $1 billion from customers of the $5 
billion it has spent on electricity buys, said Nathan Barankin, a spokesman 
with the attorney general. 
The state said it would ask the court to reconsider its supply decision. The 
ruling, Barankin said, "allows Enron to perpetuate its scam on California's 
taxpayers." 
That's a position Enron vehemently denies. 
"We believe, under the way the contract is written, it gives us the right to 
supply the power or have somebody else source the power for us, such as the 
utilities," said Enron spokeswoman Peggy Mahoney. 
Enron convinced the appeals panel that it should not have to purchase power 
on the spot market to honor its contract, and instead can make good on its 
cheap power contract by buying it from the utilities. 
That means Enron will pay substantially less for the electricity through the 
utilities and will reimburse the universities for possible charges that 
exceed the contracted price with Enron. 
Electricity sold through the utilities is capped under California law and 
does not reflect the true cost of the power. Billions of dollars of 
undercollected costs is among the main reasons PG&E filed for federal 
bankruptcy protection early last month. 
The case is UC Regents v. Enron Energy Systems Inc., 01-1006. 
--- 
http://www.governor.ca.gov 
http://www.enron.com

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


USA: Northern Border Partners buys Midwestern Gas.

05/07/2001
Reuters English News Service
(C) Reuters Limited 2001.

OMAHA, Neb., May 7 (Reuters) - Northern Border Partners LP said it has 
completed the acquisition of Midwestern Gas Transmission from El Paso Corp 
for about $100 million. 
The Midwestern system, a 350-mile natural gas pipeline extending from 
Portland, Tenn. to Joliet, Ill., provides interconnections to seven major 
pipeline systems in the Chicago market area, including the Northern Border 
Pipeline.
The purchase, announced in mid-March, was completed April 30 following 
approval of the Federal Trade Commission. 
Northern Border Partners owns a 70 percent general partner interest in 
Northern Border Pipeline Co., a 1,214-mile pipeline system that transports 
natural gas from the Montana-Saskatchewan border to markets in the Midwestern 
U.S. The partnership also has gathering systems and processing plants in the 
Powder River, Wind River and Williston Basins in the U.S. Rocky Mountain 
region; owns and operates processing plants and gathering pipelines in 
Alberta, Canada; and transports coal-water slurry via a pipeline in the 
Southwestern U.S. 
Northern Border Partners' general partners are units of Enron Corp. and 
Williams Cos. Inc. .

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


Enron Confirms DPC's Meet With Indian State Panel May 11

05/07/2001
Dow Jones International News
(Copyright (c) 2001, Dow Jones & Company, Inc.)

NEW DELHI -(Dow Jones)- U.S. energy company Enron's (ENE) Indian unit Dabhol 
Power Co. will meet the country's Maharashtra state government's expert 
committee appointed with the objective to renegotiate the controversial power 
purchase agreement with DPC, Enron Vice President John Ambler confirmed to 
Dow Jones Newswires from Houston late Monday. 
In an online statement, Ambler who handles Enron's international public 
affairs, said: "We confirm that Dabhol Power Co. has been invited to meet 
with the recently formed negotiating committee. As a matter of courtesy we 
have agreed to meet with them (on May 11). Since the purpose of our meeting 
is to hear out the committee and understand their thoughts, we will not 
present any proposals."
"While we have constantly maintained that we are open to continuing a 
dialogue towards resolving issues, this meeting should in no manner be 
construed as an open offer from DPC to renegotiate the terms of the 
contract," he added. 
Dabhol has come under fire because of the relatively high cost of its power. 
Critics object to Dabhol charging 7.1 rupees ($1=INR46.82) a kilowatt-hour 
for its power, compared with INR1.5/kwh charged by other suppliers. 
The $3 billion, 2,184-megawatt DPC project in Maharashtra has been mired in 
financial disputes after the Maharashtra State Electricity Board, its main 
customer, failed to pay several bills. The project has the largest single 
foreign investment in India. 
As reported, a nine-member state committee headed by retired federal Home 
Secretary Madhav Godbole is working toward lowering the DPC's power tariff 
and allowing the sale of excess power to the federal government or its 
utilities. A restructuring of the DPC's stakeholding may also be on the 
agenda. The Maharashtra government has asked the committee to try to 
negotiate a revised agreement within a month. 
The DPC currently operates a 740-megawatt naphtha plant contributing about 
0.7% to India's installed capacity. Enron has maintained that work will be 
completed by the year-end in the second phase of the Dabhol project that will 
add 1,444 MW to its capacity. The plant will switch from naphtha to liquefied 
natural gas as a fuel source in 2002. 
Texas-based Enron has a 65% stake in the DPC and is the project's largest 
shareholder. Other shareholders include the MSEB with 15%, and General 
Electric Co. (GE) and Bechtel Enterprises (X.BTL) with 10% each. 
-By Himendra Kumar, Dow Jones Newswires; 91-11-461-9427; 
himendra.kumar@dowjones.com

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