The New Power / 'THEY GET IT' / Enron displays political savvy in access to 
decision-makers
Houston Chronicle, 04/15/01

THE NEW POWER / Enron / Making of the Market-maker / Pipeline operator 
evolved into player that keeps raising bar
Houston Chronicle, 04/15/01

THE NEW POWER / Enron / Making of the Market-maker / With ups and downs, 
Enron Broadband is a work in progress
Houston Chronicle, 04/15/01

THE NEW POWER / Enron / Making of the Market-maker / The project
Houston Chronicle, 04/15/01

SIGN OF THE TIMES / Glowing logo once hovered over the city that oil built
Houston Chronicle, 04/15/01

THE NEW POWER / Returns on investments too slow in developing nations
Houston Chronicle, 04/15/01

THE NEW POWER / Working environment now driven more by new ideas than old 
doctrine
Houston Chronicle, 04/15/01

THE NEW POWER / Firm in a hurry to get into new downtown tower
Houston Chronicle, 04/15/01

THE NEW POWER / Current lineup
Houston Chronicle, 04/15/01

THE NEW POWER / Enron's chronology
Houston Chronicle, 04/15/01

GRASS-ROOTS BUSINESS
Oil-Patch Epicenter, Embracing the Web
The New York Times, 04/15/01

Sierra Pacific Suspends Quarterly Payout Because of Energy Crisis in Western 
States
Dow Jones Business News, 04/15/01

India: Report cautions Maharashtra on PPAs
The Hindu, 04/15/01

Graft vs graft: Political scene in state hits nadir
The Times of India, 04/15/01

In an energy crisis, lean toward the green
The News & Observer Raleigh, NC, 04/15/01



A
The New Power / 'THEY GET IT' / Enron displays political savvy in access to 
decision-makers
DAVID IVANOVICH, Houston Chronicle Washington Bureau
Staff

04/15/2001
Houston Chronicle
4 STAR
1
(Copyright 2001)

WASHINGTON - When then-candidate George W. Bush needed a plane to shuttle his 
staff around on the campaign trail, corporations scrambled to offer up their 
private jets. 
The Bush camp was eager to fly the friendly skies of Enron Corp.
When former Secretary of State James A. Baker III was out of a job at the end 
of the first Bush administration, Houston-based Enron had some consulting 
work waiting. 
And when then-President Clinton, ex-President Ford and golfing legend Jack 
Nicklaus needed a fourth, Enron Chairman Ken Lay was available to play a 
round of 18 holes. 
Here, in a town where access to the political elite is everything, Enron is 
master of the game. 
Other companies contribute to political campaigns, hire former insiders and 
hobnob with politicos, but few do so on a par with Enron. 
"They get it," noted Andrew Wheat, research director for Texans for Public 
Justice, an Austin-based watchdog group and frequent Enron critic. "They 
understand how it works and . . . how things get done, both here and abroad. 
"I can't think of another company in Texas that compares." 
In part, Enron's political smarts are an outgrowth of the company's business 
strategy, to be first in an emerging market even as the rules of the game are 
being formulated. 
The company's shrewdness also is a reflection of Lay's own personality, his 
experience in government and his affinity for politics. 
And now, thanks to his longtime association with - and munificent 
contributions to - President Bush, Lay is the envy of corporate America. 
Access to decision-makers in both parties, however, does not always translate 
into favorable decisions. Enron's recent lobbying efforts have yielded rather 
mixed results. 
Consider: 
The new Bush administration has taken a largely hands-off approach to the 
electricity crisis in California, heeding the advice of power wholesaler and 
marketer Enron. But Enron's broader objective, national deregulation of the 
power industry, remains stalled on Capitol Hill. 
Enron officials support the Republicans' vision of a smaller federal 
government. But the Bush White House has proposed whacking the budgets of two 
federal agencies Enron has relied upon repeatedly, the Export-Import Bank of 
the United States and the Overseas Private Investment Corp. 
Bush, much to Lay's surprise, pledged to try to force power plants to curb 
their carbon-dioxide emissions, the main greenhouse gas implicated in global 
warming. That policy could have created a vast growth market for Enron, whose 
business benefits from construction of more natural-gas-fired plants that 
emit less carbon dioxide. But last month, Bush flip-flopped on that promise. 
According to all conventional wisdom inside the capital Beltway, Enron should 
not be suffering political setbacks now. 
Lay, a former Naval officer and one-time energy policy-maker during the Nixon 
administration, is one of Bush's longest and staunchest supporters. 
An ally of the elder George Bush, Lay worked closely with George W. Bush 
during the Republican National Convention in Houston in 1992, when Lay 
co-chaired the host committee. They met up again during the site-selection 
process for the senior Bush's presidential library. 
As the younger Bush became a force first in Texas and then in national 
politics, Lay and other Enron officials emerged as perhaps the biggest 
contributors of his political career. By July 1999, with Bush's run for the 
presidency just getting under way, Enron officials had already contributed 
more than $550,000 to him, according to the Center for Public Integrity. 
Bush and Lay never became fishing buddies or bird-hunting pals. But then-Gov. 
Bush did appoint Lay to head his governor's business council. 
And he dubbed Lay with a series of nicknames, including "Kenny Boy." 
Lay didn't forget Bush during the presidential race. He was one of the 214 
Bush "Pioneers," supporters who raised at least $100,000 for the candidate, 
and also ponied up cash for Bush's Florida recount battle. 
For the inaugural festivities, Lay, Enron Chief Executive Jeff Skilling and 
the corporation itself each contributed the maximum $100,000. 
But Lay says he didn't contribute so heavily to Bush in the hopes of getting 
something out of him. Instead, he believed in him as a candidate. 
"He's smart," Lay said. "He's got good values. He's got family values. . . . 
He's a man of character and integrity, just like his father." 
Bush also shares Lay's vision of deregulated, competitive markets. "My basic 
philosophy is very much in tune with his basic philosophy," Lay said. 
After the election, Lay was frequently mentioned as a possible candidate for 
both energy and Treasury secretary. He has also been advising the Bush team 
on energy policy. 
Lay's political star, however, didn't rise just with Bush's relocation from 
Austin to Washington. 
Despite his strong GOP credentials, Lay was a frequent visitor at the Clinton 
White House, helping to host the Brazilian president, advising the Democratic 
administration on trade policy and brainstorming on global warming. 
Lay was on good terms with all three Treasury secretaries under Clinton - 
Lloyd Bentsen, Robert Rubin and Larry Summers - as well as White House Chief 
of Staff Thomas "Mack" McLarty and former Energy Secretary Bill Richardson. 
To handle the day-to-day political work, Enron doesn't hesitate to hire some 
of the heaviest hitters on the political scene. 
The company's list of political consultants has included: Bill Paxon, a 
former conservative leader in the House; Ralph Reed, one- time head of the 
Christian Coalition; former Sen. J. Bennett Johnston, D-La., and Elizabeth 
"Betsy" Moler, former chairwoman of the Federal Energy Regulatory Commission 
and one-time deputy energy secretary. 
The company's board of directors includes Wendy Gramm, former head of the 
Commodity Futures Trading Commission and wife of Senate Banking Committee 
Chairman Phil Gramm, R-Texas, and John Wakeham, Britain's former energy 
minister. 
Back in the early 1990s, within weeks of the end of the first Bush 
administration, Enron hired Baker and former Commerce Secretary Robert 
Mosbacher. 
The move sparked controversy when Baker, who as secretary of state had helped 
forge the international coalition that expelled Iraqi troops from Kuwait, was 
visiting a liberated Kuwait lobbying on Enron's behalf. 
Government watchdogs have long decried the "revolving door" between top 
government jobs and the corporate world. Wheat of Texans for Public Justice 
said Enron keeps that door "spinning." 
More recently, Enron angered right-wing partisans on Capitol Hill when it 
hired Linda Robertson, a former assistant Treasury secretary in the Clinton 
administration and a Democrat, to run the company's Washington office. 
Lay is not apologetic. 
"We don't discriminate based upon color or creed or race or religion or sex," 
Lay said. "We also don't discriminate based upon political preference." 
Unlike many other companies, which are shy of government involvement, Enron 
does not hesitate to use the resources of the federal government to boost 
exports and win contracts overseas. 
Commerce secretaries, for example, routinely take U.S. businesses on 
international road shows, hoping to use Uncle Sam's political influence to 
win business for American firms. During the Clinton years, Enron executives 
accompanied commerce secretaries on at least seven such trips, government 
records show. 
The Overseas Private Investment Corp. provides political risk insurance and 
project financing to U.S. companies doing business overseas. Enron has been 
one of the agency's biggest customers. 
And since the end of the Cold War, U.S. diplomats have become much more 
involved in advocating for American firms. 
While other companies have been slow to seek out the State Department's help, 
"Enron was in step with that change," noted McLarty, a former 
natural-gas-company executive and an expert on Latin American trade. 
Closer to home, deregulation of the electric-power industry tops the 
company's domestic political agenda. 
To date, electricity deregulation has progressed piecemeal, state by state. 
Bills in Congress to deregulate the industry nationwide have gone nowhere. 
Enron officials were able to enlist the support of the Clinton 
administration, but the legislation failed to move on Capitol Hill, largely 
because of personalities and turf issues. 
"It didn't come to fruition, not because of Enron but because of a lack of 
leadership on the issue, particularly in the House," said Moler, the former 
Energy Regulatory Commission chairwoman. "Enron was very effective, even 
though they didn't get the ball across the finish line, in terms of 
advocating a pro-competition agenda." 
Now, there's a new Congress and a new occupant of the Oval Office, a 
pro-competition advocate who oversaw the deregulation of the Texas power 
market. 
But Enron's hopes of a national deregulation bill dimmed as the lights 
flickered out in California. 
While energy experts can think of numerous reasons why California's energy 
crisis was largely of its own making, the rolling blackouts there have caused 
other states to slow their deregulation efforts for fear of similar troubles. 
Even politically savvy Enron may have a tough time pulling out a victory from 
those ashes.


Photo: 1. Jim Crownover, left, and his wife, Molly, welcome former President 
Bush and Enron Chairman Ken Lay at their home in February 2000. The United 
Way of the Texas Gulf Coast honored the Alexis de Tocqueville Society during 
a reception for major donors at the Crownovers' residence (p. 19); Mugs: 2. 
Lloyd Bentsen (p. 19); 3. J. Bennett Johnston (p. 19); 4. Bill Paxon (p. 19); 
5. Ralph Reed (p. 19) 

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


BUSINESS
THE NEW POWER / Enron / Making of the Market-maker / Pipeline operator 
evolved into player that keeps raising bar
MICHAEL DAVIS
Staff

04/15/2001
Houston Chronicle
2 STAR
1
(Copyright 2001)

AT ENRON CORP., it came to be known as the "Come to Jesus" meeting. 
This gathering in late 1988 had nothing to do with religion, but everything 
to do with a leap of faith.
Top management, about 70 in all, met to find out where their company was 
headed. They were told to expect a big change. 
At the meeting led by Rich Kinder, who would soon become Enron's president, 
they were briefed on the company's new strategy. Like the unredeemed at a 
revival meeting, the leaders of the then-stodgy natural gas pipeline company 
were told they had to change their ways. 
Rather than stick to only the safe and highly regulated gas pipeline 
business, Enron officials were about to stake their company's future on the 
unregulated part of the business and look for opportunities worldwide. 
"The decision was made that we needed to move quickly," said Ken Lay, Enron 
chairman. "And if we were going to be a leader, we were going to have to go 
after it. If not, other people would." 
The gravity of the moment was not lost on those present. These veterans of 
the regulated pipeline business were now working for a company that was 
heading into uncharted territory. Many in the room would be gone from the 
company within months, replaced by younger executives who were more open to 
change. 
"They may talk about it casually now, but at the time they were sweating 
bullets," said Robert Bruner, executive director of the Batten Institute at 
the University of Virginia, who teaches a case study on Enron's evolution to 
executives. 
The company has made its mark by being in the vanguard of change. Since that 
fateful meeting in the late 1980s, it has shown over and over again that it 
has a knack for knowing when to exit a declining market and move on to the 
next one. 
Now the the pipeline business has moved into the background at Enron. Enron 
now profits mainly by making it easier to buy and sell things that otherwise 
would be difficult to market - a process the company calls "making markets." 
"They have shown they can trade almost anything and have a compelling need to 
dominate any market they go into," said John Olson, an energy analyst with 
Sanders Morris Harris in Houston. "They do it with a sort of Gulf War 
military doctrine of using overwhelming force, technology and people, going 
in with a blitzkrieg to get the best of the market and move on." 
That statement could serve as a summation of Enron's business strategy during 
its period of explosive growth that made it the first Houston-based company 
to post annual revenues of $100 billion a year. Most of the time the approach 
has paid off, with only a few major missteps. 
Enron has been in the forefront of sea changes numerous times, and not just 
in the energy industry. 
When Houston Natural Gas was bought by InterNorth, creating Enron, it formed 
the first nationwide interstate natural gas pipeline system. 
The company created the first futures market for natural gas with its Gas 
Bank - allowing users to buy and sell gas for future delivery - years ahead 
of the first futures contract to trade on the New York Mercantile Exchange. 
It also developed many of the methods of hedging natural gas costs that are 
used today to reduce the risk of price swings. 
Enron's pipeline was the first system to offer its interstate pipeline to 
transport anyone's gas for a fee. Now, all interstate pipelines are run in 
that fashion. 
The company's $2 billion power plant project in India is the largest single 
outside investment ever made in that country. 
The company moved quickly to become a player when California lawmakers voted 
to open that state to electricity supplier competition, and soon changed its 
plans to limits its risks there. In 1996, Enron became the first natural gas 
pipeline company to buy an electric utility, Portland General Electric in 
Portland, Ore. 
Enron OnLine, the company's Internet trading site at enrononline.com, has, in 
only a year or so of operation, become the largest e-commerce site in the 
world. 
Now, Enron makes 80 percent of its profits from businesses that did not exist 
in 1988, the huge wholesale markets that have developed for natural gas and 
electricity-marketing, broadband, fiber-optic and energy services. 
"It seems like they do everything," said David Nemtzow, president of the 
Alliance to Save Energy, a nonprofit energy conservation group. "$100 billion 
(in annual revenues) is nothing to sneeze at. Exxon Mobil was founded by John 
Rockefeller, Enron's only been around for 15 years." 
Enron still trails Exxon in size, since the biggest company in the oil 
business had $233 billion in revenues last year, and it is not be as well 
known as John D. Rockefeller. 
But its influence is becoming almost as pervasive as his once was. 
The company was one of the largest contributors to the campaign of President 
Bush and Lay is considered one of the president's closest private-sector 
advisers on energy policy. He is personal friends with both the president and 
his father. 
The company has equally strong ties to Democrats, including access to former 
President Clinton. 
But at the same time, Enron's role in deregulation in the United States and 
globalization have made it a target for protesters who blame private energy 
companies for the deregulation fiasco in California and U.S. multinationals 
for a wide array of troubles overseas. 
And the company which has been leader in this business, is regularly racing 
against a pack of competitors, including Houston- based El Paso Corp. Reliant 
and and Dynegy. 
Kinder, who declined to be interviewed for this story, left when it became 
apparent he wouldn't become CEO and started his own energy company Kinder 
Morgan. 
"You really can't copyright or patent this sort of stuff," said Jeffrey 
Skilling, Enron's chief executive officer."This is like an arms race where 
the arms are brains. You need smart people that are constantly thinking up 
the next things the customer needs. 
"What a change from the gas business 25 years ago, when the whole name of the 
game was good regulatory lawyers," Skilling said. 
Now, its future depends on a continuing willingness to take chances on new 
things, and when things aren't working, to spend what it takes to change 
them. 
"Maybe that's a lesson we all learned: There is usually no second best; it's 
winner take all and you better get in there and you better fight your best 
battle because it's pretty hard to play catch-up," Skilling said. 
... 
Surviving the culture clash 
The executives who were called to the Come to Jesus meeting already had 
survived three years of tumult. 
Even Ken Lay, who was behind that message, had his doubts about the whole 
enterprise in the beginning. He was there because of a contract he had signed 
that he likened to having his hands glued to the steering wheel. 
The merger of Omaha, Neb.-based InterNorth and Houston-based Houston Natural 
Gas created a company that was mired in debt and had to battle corporate 
raiders. The employees from the companies that formed Enron clashed as well. 
"That first year after the merger was kind of interesting," Lay said, in a 
characteristic understatement. He described the corporate culture battle in 
those early years as "bloody." 
Bill Brendler, an organizational psychologist who was brought in to help 
combine the companies' cultures, recalls going to Omaha after the merger and 
not hearing anyone refer to the new company as Enron. All of the InterNorth 
people were still calling the company by its former name. 
"It was kind of gut wrenching to them, like they had been sold out," said 
Brendler, who operates a consulting company based in Austin. 
The merger had left the new company with a mountain of debt. It was one of 
the first big junk bond mergers engineered by Michael Milken. 
The company's financial woes got even worse around Christmas 1985, when the 
Peruvian government nationalized all of the company's oil and gas properties 
in that country, depriving Enron of its main sources of cash flow. 
Then, in January 1986, oil prices collapsed from $30 per barrel to $10. 
To add to the company's problems, it came under fire from raider Irwin 
Jacobs, who led a group that held about 15 percent of Enron's stock. 
In a bid to fend off Jacobs' group, Enron considered going private. They 
turned to one of the most high-profile takeover partnerships of the time, 
Kohlberg Kravis Roberts & Co., to look into financing a deal to buy all its 
publicly traded shares. That deal came, "very, very close," Lay said. 
Eventually, the company ended the takeover threat by buying back Jacobs's 
shares. 
All this was going on as the company's top management was in a state of flux. 
Lay was named chief executive officer in November 1985 and elected chairman 
in a February board meeting that he still recalls vividly today. Lay had 
recommended that Bill Strauss, former InterNorth chairman and chief executive 
officer, come on as chairman. 
"I thought it would sort of pull the teams together," Lay said. "He could 
give me air cover in Omaha." 
In retrospect, Lay said, his recommendation probably heightened the battle 
between the rival groups of employees. Strauss, too, soon realized that there 
was room at the top for only one. 
Before the company's February 1986 board meeting in Winter Park, Fla., 
Strauss had persuaded Lay to tear up his contract with a golden parachute, 
which would have paid him handsomely if he left the company, in return for 
incentives in stock options. 
"He wanted to make sure I was committed to the company and I was because I 
had no choice," Lay said. "They sort of glued my hands to the steering 
wheel." 
Strauss called the board meeting to order and resigned on the spot, stunning 
Lay and everyone else in the room. He recommended the board elect Lay 
chairman and CEO. 
He then said, "I'll see you around," walked out of the room, drove to the 
airport and caught a flight back to Omaha. 
After about 30 seconds of silence, one of the former InterNorth directors 
nominated Lay to be chairman, another seconded it and they voted on it. 
"There I was," Lay said, laughing. "Just totally prepared for it." 
... 
Learning from near-disaster 
Enron took the leap into the volatile world of deregulated energy markets in 
spite of a trading fiasco that could have pushed the company to the brink of 
bankruptcy. 
In 1987, Enron was rocked by the disclosure that rogue traders at its Enron 
Oil Co. had left the company holding the bag for about $1 billion in trading 
liabilities. Before disclosing it to the market, the company worked the 
trading loss down to about $142 million. 
The experience was one Lay and others at the company would not forget. But 
rather than losing faith in making markets, this was a lesson that shaped the 
way the company is run. 
"We learned a lot, certainly in a bad way," Lay said. "We put in place 
probably the best risk management and control system, not just in our 
business, but in any industry." 
The company has become a leader in developing risk management strategies, 
offering hedges on everything from weather derivatives to advertising space. 
Many of these techniques were developed during the late 1980s with the 
guidance of a former consultant at McKinsey & Co., Jeffrey Skilling. 
It was Skilling, among others, who came up with the idea for Enron to create 
The Gas Bank, a unique concept of packaging natural gas supplies so they 
could be bought on a long-term basis for fixed prices to suit an individual 
customer's needs. 
"It was the first forward pricing structure for natural gas," Skilling said. 
The idea was to gather gas supplies on one end of the pipeline, customers on 
the other, and then put together deals to serve both sides' needs. 
It worked like this. From the overall production of a well or field, the 
company would sell parts of the production to different customers - an 
industrial customer might buy a portion of the production for a year, while a 
local gas distribution company might buy a share of the production for two or 
three years, and a power producer might buy a 10-year supply. At the time, 
power producers were desperate to get long-term, fixed-price supplies of 
natural gas. 
"It was very successful for us and it made it clear that there was a whole 
new way of thinking about this business," Skilling said. "We were creating a 
forward market in 1988," he said, describing that year as "a magical time." 
The company began developing package deals for its customers. One of the 
first major customers was Peoples Gas Co., the utility company that serves 
Chicago, which traditionally had relied on a huge supply organization. 
"They were buying capacity on pipelines and in storage fields, buying gas 
from producers with a massive organization," Skilling said. "We went to them 
and said, give us all of that stuff, we'll manage it for you. Then all you 
have to do is call us in the morning and tell us how much gas you need and we 
will have it ready." 
From The Gas Bank, Enron eventually set up Enron Gas Marketing, and they 
started bidding, mainly on spot transactions. It was the genesis of Enron's 
massive wholesale trading operations today. 
It was also around this time that the company began to move into energy 
financing. After the bust of 1986, banks had pulled out of the energy lending 
business and Enron believed it could make money by filling that void. 
What had begun as a gas marketing unit also was now engaged in venture 
finance. Enron Gas Marketing became Enron Capital and Trade Resources, with 
Skilling at the helm. He later would become head of Enron North America, over 
all of the company's domestic operations. 
When Enron's natural gas wholesale business began, there were about 70 
employees. Now, including power sales, there are 5,000. 
"We always kidded that Enron Capital and Trade Resources sounded kind of 
complicated, but no matter what we named it, within six months, everyone else 
in the industry had one just like it," Lay said. 
... 
Portrait of Ugly American 
Enron's foray into unregulated overseas markets has been largely successful, 
but when it has gone bad, it has gone very bad. 
The company has built some of the largest power projects and pipeline systems 
in international markets over the past 10 years or so, but in the process it 
often has been portrayed as the Ugly American corporation by critics who 
accuse it of spreading around payoffs and showing little regard for human 
rights or the environment. 
Enron has responded that those allegations are unfounded, but has made 
changes in its international business that have moved it away from those 
confrontations. 
It began testing its plan to build an international business in 1988, when it 
established an operation to build gas-fired electric generating plants in the 
United Kingdom as that country's electricity markets were privatized. 
"We were beginning to get a little momentum from the standpoint of stepping 
outside of our regulated business in North America and even stepping outside 
of North America a little bit," Lay said. "But we still had to demonstrate 
that we could do it without great risk. That was a fairly important part of 
those early days." 
As Enron branched out into international markets, the executive who took the 
international reins was a woman who stood out in the largely male domain of 
the energy business. Her name was Rebecca Mark. 
Mark, who declined to be interviewed for this story, became one of the stars 
at Enron after she successfully saw through to completion the company's 
controversial Dabhol power plant project in India. 
Enron bought a 65 percent share in the Dabhol Power Co. back in the early 
1990s. Enron believed it could replicate the success it had had in England 
with its massive Teesside power plant in the United Kingdom. 
The political landscape in India, however, proved to be far more daunting. 
The $2.9 billion project became a political nightmare for Enron. After a 
change in the ruling party, the project was halted amid accusations that 
Enron had a sweetheart deal with the previous regime to build the plant. 
That standoff led to construction delays at the huge project that were 
costing Enron a small fortune. Mark got the job of leading the effort to 
renegotiate the deal to get the plant construction back on schedule. 
In an interview she gave in early 1997, Mark said "People thought we were 
pushy and aggressive. But think of the massive bureaucracy we had to move. 
How do you move a bureaucracy that has done things one way its entire 
collective life? You have to be pushy and aggressive." 
Adding to the project's bureaucratic difficulties were mass protests from 
nearby villagers. Enron was accused of human rights abuses because of the 
tactics used by local police the company hired as security. 
Human Rights Watch and Amnesty International accused Enron's security guards 
of beating villagers who protested the project. 
Enron said the accusations about human rights abuses in a report released in 
early 1999 were false. In the wake of those allegations, Enron hired a human 
rights director to handle concerns at its global operations. 
Eventually, Mark renegotiated the deal and phase one of the plant was 
completed and went into operation. This victory gained her international 
attention and led to her being named vice chairwoman at Enron. 
But she gained attention largely because of the business she had chosen for 
her career. She was a single mother who had risen to the top in the energy 
business. Enron liked to portray her as evidence that it was a new kind of 
energy company in which everyone had a chance to prosper. 
As a rising star, Mark was tapped to head up the company's effort to get into 
the international water utility business. 
It would prove to be her undoing as Enron shifted from owning lots of 
physical assets, which was the side of the business where Mark had made her 
name, and into its so-called asset-lite strategy. 
The problems she dealt with in India have not been resolved; they have 
resurfaced in another form. The company is not getting paid for power because 
it's said to be too expensive. 
Enron officials maintain that they are sticking behind the project, even 
going so far as to warn Indian politicians that taking on Enron will be "like 
playing chicken with a brick wall." 
But analysts question how long they can last. 
"Clearly India has been a political hot potato," for Enron, said Carl Kirst, 
an analyst with Merrill Lynch Global Securities in Houston."They've continued 
to put one foot in front of another against almost gale-force winds. 
Sometimes it's not worth the uphill battle." 
The company is reportedly looking to sell its stake in the Dabhol project to 
either Reliance, one of India's largest industrial concerns, or China Light 
and Power Co. There is some doubt as to whether the project would command 
full value given all of the political problems at the plant. 
An Indian observer is more blunt on the subject. 
"India is not a place where their fortunes lie," says analyst Subhash 
Agarwal, editor of India Focus, a political risk magazine. 
... 
The power of electricity 
Once Enron had become a dominant player in the unregulated natural gas 
business, the company set its sites on a new market: electricity. 
It was in many ways much more of a gamble than the company's move into 
unregulated natural gas markets. The electricity business was even more 
entrenched in regulation than gas had been. And it was being deregulated in a 
piecemeal fashion, state by state, instead of through a federal regulatory 
process like the one that covered gas. 
Yet when describing it, Lay makes it sound simple. 
"We just took the model that Jeff and his team developed in the early 1990s 
for wholesale North American natural gas and began to move it out to other 
markets." Lay said. 
In 1997, the company made its first major move on domestic electricity 
markets when it bought Portland General Corp., the parent company of Portland 
General Electric, the utility serving Portland, Ore. 
The purchase gave the company a beachhead into the soon-to-be- opening 
California market and a marketing arm on the West Coast. 
Three years after buying Portland General, though, the nation's electricity 
markets had changed to the point where Enron decided to sell the electric 
company. 
The company realized it no longer needed an electric utility to be a major 
player. It was another of many lessons for Enron that making markets, not 
owning physical assets, was where its future lay. 
In many ways, Enron's experience in California has been a textbook example of 
how they quickly move out of a market when an investment is not living up to 
expectations. 
In California, the company avoided getting involved in that state's energy 
crisis because it chose not to buy power plants there, but rather stick to 
offering services and selling power on the wholesale markets. 
"Because it does not own generation in the region, Enron is not forced into 
power trades with the utilities the way the California wholesale generators 
have been," said Jeff Dietert, analyst with Simmons & Company International 
in Houston. 
The company realized soon after the California market opened in March 1998 
that the legal framework was flawed and was a recipe for disaster. 
"When we entered California, we were still trying to change the rules so 
competition could take hold; we were not successful," Lay said. "At the end 
of the day, it was set up in a way that the more you sold, the more you 
lost." 
But the recent filing of Chapter 11 bankruptcy by Pacific Gas & Electric Co., 
has drawn Enron into the crisis in a big way. The company disclosed last week 
that it is owed $570 million by the bankrupt utility. Enron has been named to 
the creditors committee for the case. 
Rather than restrict their power business to individual states or regions, 
the company last year decided the time had come for a national effort to 
enter opening power and gas markets. 
Enron formed a nationwide power and natural gas retail marketing company 
catering to residential and small-business customers named The New Power Co. 
The company is a joint venture of Enron, IBM and AOL Time Warner. 
The concept of the joint venture is for Enron to provide natural gas and 
electricity as a commodity, IBM to provide technical support and service, and 
AOL to provide an Internet platform to market the service nationwide. 
But less than a year after the company was formed, its concept is already 
outdated. It has become apparent that the role that AOL was expected to play 
in marketing the service is not needed; most of the sales so far have 
happened over the telephone as a result of direct- mail solicitations. 
"AOL is a problem," said Gene Lockhart, chief executive of The New Power Co. 
"We are not a dot-com. About 70 percent of our sales come through traditional 
channels." 
The intended role of AOL in the joint venture "just hasn't worked," Lockhart 
said. Now, the deal with AOL is being renegotiated as The New Power Co. 
establishes relationships with other Internet companies. 
Since its inception last year, The New Power Co. has grown rapidly and now 
has about 650,000 customers in 15 states. The company expects to finish the 
year with 1.2 million customers split about equally between natural gas and 
electricity, said Bill Jacobs, the chief financial officer for the company. 
The New Power Co. recently announced that it had signed up over 5,000 
residential electricity customers in Texas as part of the state's pilot 
program to test deregulation. 
"I think Texas is a market we will be able to enter from day one," Lay said. 
"Both with The New Power Co. for residential and Enron Energy Services for 
large customers." 
... 
Broadening its horizons again 
When Enron bought Portland General, it picked up a new line of business - a 
telecommunications unit with only 25 employees that moved data over 
fiber-optic lines. 
From that tiny start, Enron is creating what it expects will someday grow 
into a venture that could rival its natural gas and electricity businesses. 
While electricity looked like a natural next step for Enron after natural 
gas, the business of trading space on broadband lines appeared on its face to 
be a different sort of animal. But after a second look, the company's traders 
noticed that the broadband business looked a lot like natural gas markets in 
the mid-1980s. 
In both cases, owners of lines were paid to deliver something. But buying and 
selling this valuable service was difficult because there were no 
standardized terms and conditions for contracts and no opportunity to buy or 
sell on a short notice. 
For businesses to ensure they had all the broadband capacity they needed 
during peak periods, they often had to pay for the capacity to send far more 
data than they needed. 
"We found even in the case of Enron, when we looked at our connections 
between Houston and London, the average load factor was only about 15 
percent," Lay said. "It's close to 100 percent during peak days, peak hours, 
etc. But there were an awful lot of nonpeak periods when it was very low. We 
couldn't do anything with that extra capacity." 
All of these elements combined to make a very inefficient business - which to 
Enron meant there were customers out there willing to pay someone to manage 
their broadband requirements. 
The broadband business reported a $60 million operating loss for 2000, and 
the company has warned analysts that it will continue losing money for the 
next two years or so as it builds its nationwide fiber-optic network. 
The company's broadband business suffered a setback recently when its deal to 
provide on-demand video with Blockbuster Video fell through. The cancellation 
of the 20-year deal means Enron's broadband business will have to go after 
smaller contracts, which could mean a longer time to expand the business. 
Losing the Blockbuster deal, and a staff reduction that reduced the broadband 
team by more than 20 percent, has not dampened company officials' enthusiasm, 
though they admit the growth may take longer than expected. 
"This is going to be a core business for us," Lay said. "With this business, 
we will show that companies define themselves not by industry, but by skill 
base." 
... 
Azurix turns into wash 
Undoubtedly, the biggest blunder Enron has made as it has grown away from 
being strictly an energy company was its misguided foray into the water 
business. 
It cost the company billions, confirmed the wisdom of the strategy to shift 
away from hard assets, and cost Rebecca Mark her job. 
Enron bought Britain's Wessex Water in 1998 for $2.8 billion to use as a 
platform to launch a worldwide water business. The plan was to take over 
formerly public water and wastewater facilities as they privatized as well as 
manage such facilities. Enron thought it could once again turn a mature 
regulated business into a growth machine. 
The move ran counter to the way the rest of the company was going. Enron was 
going to a strategy built around making markets, rather than ownership of big 
assets. This allowed it to grow faster using less capital. 
Enron turned to investors for capital to fuel its water venture, which was 
led by Mark and named Azurix. It went public in June 1999, selling about 
one-third of its shares to investors at $19 per share. 
But Azurix soon ran into fierce competition. Giant multinational rivals such 
as Vivendi and Suez Lyonnaise des Eaux outbid Azurix time and again for 
projects, forcing Azurix to pay more for some deals than they were worth. 
The real blow, however, came when regulators in England clamped down on water 
rates, depriving the company of its main source of cash flow. 
Azurix's shares plummeted 40 percent in December 1999 when the company said 
it would not make fourth-quarter expectations and was laying off much of its 
staff. 
Enron decided last summer that it was time to stop the bleeding. Mark 
resigned from Azurix and from her seat on Enron's board, severing ties to the 
company she had helped create. A few months later, Enron announced a plan to 
take the company private. 
"I am not sure if the strategy was flawed or if it was never given a chance," 
Lay said. "Some of the operating assumptions didn't prove out, but this was 
never meant to be a long-term business for us. We thought we could transfer 
some of our skills into it." 
Skilling, who was the champion of the company's market-driven business 
strategy, is a bit more blunt about the experience. 
"You win some, you lose some, " he said. "If you don't have some mistakes, it 
means you're not trying. I wish it wasn't as big a mistake as it was, but you 
can't win them all. 
... 
Making and creating markets 
The mantra at Enron nowadays is, "We make markets." 
The company is positioning itself to be a private-sector, online version of 
the New York Mercantile Exchange, offering traders an Internet platform to 
buy and sell a vast range of commodities as well as less tangible items such 
as emissions credits and weather hedges. 
Stock market observers are having an increasingly hard time figuring out how 
to value Enron's shares, which sometimes trade in tandem with technology 
stocks rather than energy stocks because of the growing broadband business. 
The University of Virginia's Bruner said the question he is most often asked 
when he teaches his Enron case study is whether the company can keep finding 
new businesses to enter to sustain its strong growth. His answer is yes. 
"I think their model can revitalize a wide variety of areas; I think Enron is 
going to be around for a long time," Bruner said. 
EnronOnline, the company's Internet trading platform is only about 18 months 
old but did some $330 billion in transactions last year, easily making it the 
largest e-commerce site in the world. 
The company has taken its risk-management skills and approach to buying and 
selling natural gas and electricity and moved it into the old-line businesses 
of steel and paper. 
"We make markets, but they have to have certain characteristics for us to be 
interested in those markets," Skilling said. 
The commodities Enron is interested in tend to have very complex, dedicated 
delivery systems, such as gas pipelines or fiber-optic data communications 
networks. It has to be a commodity with relatively long time frames involved. 
Examples would be when a producer drills a well or someone builds a power 
plant. Those are big capital investments with long-lived assets that are 
associated with the commodity. 
"They have morphed from saying they want to be the leading gas company to 
being the leading energy company to where there is now no industry definition 
that describes them," Bruner said. 
Skilling does not believe Enron will be that much different of a company five 
years from now, other than it likely will have expanded the roster of 
commodities it trades. 
But Lay still is expecting big changes. "It will be a totally different 
company just like it is today versus five years ago," he said. "As we sit 
here with what is on our plate today, we can see some very significant growth 
with several years to come. I am sure if we look back five years from now 
there will be at least one or two businesses with enormous potential in our 
portfolio that we have not even thought of yet."


Photo: 1. From top left: Enron Chairman Ken Lay; President and CEO Jeffrey 
Skilling; former Azurix Chairwoman Rebecca Mark; an Enron worker in Dabhol, 
India (color); Graph: 2. Revenues and profits (b/ w, p. 6, BAR GRAPH); 
Drawing: 3. Enron Center South: A look inside the new tower (b/w, p. 8) 

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

BUSINESS
THE NEW POWER / Enron / Making of the Market-maker / With ups and downs, 
Enron Broadband is a work in progress
TOM FOWLER
Staff

04/15/2001
Houston Chronicle
2 STAR
1
(Copyright 2001)

IN LATE 1999, when Enron announced it would pioneer trading of a "new new" 
commodity - Internet bandwidth - analysts and investors were only a little 
skeptical. 
Nevermind that buying and selling time on the vast, unruly tangle of the 
Internet on a big scale was unheard of. Enron's reputation for making a 
profit trading almost everything from pulp to plastics made this venture look 
like a sure thing.
When entertainment giant Blockbuster Video signed a deal with Enron last 
summer to provide video-on-demand service to consumers, creating content to 
fill that giant data pipeline, investors bid up the stock to show their 
confidence in its broadband vision. 
But when the Blockbuster deal was canceled on March 9, Enron stock fell back 
to earth. 
Things got worse when Wall Street got reports that Enron Broadband Services 
was reducing its staff by more then 20 percent - which have since been 
confirmed by the company. 
That news took a bit of the high-tech shine off the company at a time when 
Enron also was getting some bad news from its international operations and 
the market was losing its taste for high flying stocks. 
Suddenly, Enron's broadband business, which helped fuel the stock's rise last 
year, had become a drag. 
The potential for broadband services and trading isn't being disputed, but 
Andre Meade, head of U.S. utilities research for Commerzbank Securities, said 
many analysts were too quick to accept Enron's estimates on the value of the 
business when it was first announced. 
"The market priced in an excessive valuation on the broadband business, 
overreacting on something that was still relatively unknown," Meade said. 
"Now it's overreacted somewhat to the Blockbuster news. I think it's dropped 
lower than it should." 
The trading side of the business appears to be exceeding expectations, but 
Enron Broadband is still expected to remain in the red for the next couple of 
years as it builds business. 
"I think we realize it's still a work in progress," Meade said. 
Enron Broadband first used its network for broadband hosting, letting a few 
large customers, such as TV networks or financial services companies, buy 
data line access on an as-needed basis for such things as Web broadcasts or 
shipping large amounts of data across the country, said Ken Rice, chief 
executive officer of Enron Broadband Services. 
In the past, if a company wanted to do a Web broadcast between two cities, 
for example, it had two choices: just do the broadcast and hope regular 
Internet traffic wouldn't slow it down or interfere with the quality, or 
reserve time on a data line months in advance and pay for several months 
worth of service, instead of just the time needed. 
"It seemed to be a business about the same size as natural gas, but growing 
by 15 to 20 percent per year," Rice said. "By 1998, we decided that telecom 
could be the company's core business." 
Enron's bold predictions were embraced by investors and analysts who had 
learned to give the company a lot of credit for its ability to successfully 
execute its business plan. That faith helped keep Enron's stock buoyant in 
the past year even as other companies with broadband businesses, such as 
Williams Cos. and Global Crossing, saw their operations lose more than half 
their value. 
Enron built its own fiber-optic network, which now runs about 18,000 miles. 
It used that to connect many other large networks around the world. To 
facilitate those connections, the company has created more than 25 "pooling 
points" where Enron's network interconnects with others, much like the Henry 
Hub in Louisiana connects many natural gas pipelines. 
It's at these pooling points where Enron can flip the switches on 
increasingly short notice to turn on a section of the network dedicated to a 
customer's needs. That lets Enron buy and sell just what the customer wants. 
Enron also created software that allows customers to reserve and schedule 
bandwidth and pick the quality of service. 
The company has seen trading grow quickly, jumping from 236 broadband trades 
in the fourth quarter of 2000 to more than 500 trades in the first quarter of 
2001. 
Enron also is moving closer to having the one tool that could really let 
trading take off - standardized contracts. That can be a hard sell. 
"Just as with the electricity and natural gas industries, a lot of the market 
says it can't start trading until trading standards are set, but that's 
bogus," Rice said. "We've come up with a couple of standard contracts 
ourselves and believe the industry will adopt standards over time." 
Meanwhile, the deal with Blockbuster to provide online delivery of movies was 
supposed to be the cornerstone of a business in which Enron would deliver a 
wide variety of content to homes and businesses. 
The companies had tests of the new service running in four cities, which 
appeared to be a success, but in early March the 20-year deal came to an 
abrupt end. 
Blockbuster was the first to announce the breakup, but Enron issued its own 
release a few hours later, saying Blockbuster was unable to secure the 
quality or quantity of movies from the studios needed to make the service a 
success. 
"Blockbuster had some relationships with the studios complete, but the 
studios ultimately weren't too excited about giving them control of the 
digital rights to films," Rice said. 
Enron Broadband now is working directly with the studios and other content 
producers to secure movie deals and expects to announce some of those 
relationships soon. The company also announced a new content deal to offer 
hundreds of video game titles online by June. 
For investors and analysts, however, the misstep with Blockbuster took the 
shine off Enron's apple. 
"They really sold the Blockbuster deal as an anchor tenant for broadband and 
as proof of their idea's success," said Jeff Dietert, vice president of 
research at Simmons & Company International. "So when it fell through, the 
one major item we could point to as a sign of a successful execution was 
gone." 
While Enron Broadband works toward earning its keep, Rice predicts broadband 
will become a bigger and bigger part of Enron's overall business. The group 
has started to trade online data storage - effectively offering companies an 
alternative to buying more storage hardware - and is even beginning to trade 
broadcast advertising time. 
"I think eventually it will be on par with natural gas retail and wholesale," 
Rice said. "A lot of the guys in that division will say `no way,' but there's 
no doubt to anyone it will be big."


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


BUSINESS
THE NEW POWER / Enron / Making of the Market-maker / The project
Staff

04/15/2001
Houston Chronicle
2 STAR
1
(Copyright 2001)

Enron Corp. has gone from just another pipeline company to the largest - and 
possibly the most powerful company - in Houston. This company's insatiable 
appetite for change has led it to create a dizzying range of new businesses 
and has spawned a surge of growth in its hometown. This package of stories 
offers a look at this innovative and powerful worldwide business empire. 
...
I N S I D E 
CULTURE: Enron has become a spawning ground for fast-growing businesses 
because it pushes bright newcomers to quickly show what they can do. But not 
everyone fits into this pressured business environment: Page 6D. 
HEADQUARTERS: Enron is in a hurry to get into its new downtown headquarters 
building. The company will begin moving people into the lower floors this 
summer, a year before the tower is complete: Page 7D. 
EMPIRE: Enron is changing its worldwide focus to Western Europe and Japan as 
it reduces its attention on developing countries, which provide a slower rate 
of return on investments: Page: 8D.


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


A
SIGN OF THE TIMES / Glowing logo once hovered over the city that oil built
ALLAN TURNE
Staff

04/15/2001
Houston Chronicle
4 STAR
33
(Copyright 2001)

For years, it hung over downtown Houston like some wacky corporate moon. 
Giant blue letters - Gulf - in an orange neon disc announced to land and air 
travelers that they were approaching the nation's oil capital. 
It was called "The Lollipop." At 58 feet tall, it was the world's largest 
rotating sign. And while the Gulf Oil Co. reveled in the giant corporate logo 
atop its neo-Gothic office tower, critics called it an 83-ton monument to 
tastelessness.
Today, as Houston reassesses its downtown architectural heritage and recasts 
itself as a city it hasn't been in 50 years, the hotly debated landmark of 
the 1960s and early '70s is largely forgotten. 
Still, with nostalgia an undercurrent in the central city's reawakening - 
Enron Field, loft apartments, refurbished office buildings and even a popular 
new diner all feature a "retro" feel - there are those who fondly recall when 
the downtown skyline was bathed in an orange glow. 
"When I first came to Houston for the first time," recalled Gordon Campbell, 
a former Gulf budget analyst, "I flew from Tulsa on the company plane. That 
sign was one of the first things I saw. It really gave me a thrill." 
"I was very passionate about it. . . . It was an icon," added one-time Gulf 
chemicals division executive Charles Rhoads, who first visited the city as a 
young Gulf employee in the mid-1960s. "It was the definition of the skyline 
back then." 
Undoubtedly the sign that had been atop what is now the Chase Bank building 
was an eye-catcher. 
With 4,700 square feet of display area illuminated by 7,350 feet of neon 
tubing, the sign rotated at a steady 1 1/2 revolutions a minute. 
"Airline pilots used it as a beacon," boasted Sherman H. Hink, chairman and 
chief executive officer of Neon Electric Corp., the company that built the 
sign. "It was advertising. As far as I'm concerned, bigger is better. The 
object of any sign is to sell." 
Built at a cost of $250,000, the sign took six months to erect. When it was 
completed in the summer of 1966, it commanded immediate attention. 
Signs of the Times magazine, a trade journal, featured the sign on the cover 
of its September issue. Gulf Oil Co. issued postcards of it, noting on the 
back that the "landmark will guide travelers and residents to the heart of 
Houston." 
"It was a fantastic sign," Hink said. "People loved this sign." 
Or at least some people loved the sign. 
"I don't want to be disrespectful," said Bill Roher, former president of 
Gulf's chemicals division, "but I was somewhat aghast. I hadn't seen anything 
that garish in any of of the cities I had been in. It wasn't the only sign. 
Tenneco, all the other oil companies had signs emblazoned on their buildings. 
But nothing like Gulf. We outdid them. 
"It was very emblematic of the times. There were very aggressive advertising 
people who felt that was one way to sell gasoline." 
Former Houston Chronicle fine-arts editor Ann Holmes said the sign made the 
the old bank building look like an oversized gas pump, to the amusement of 
some. 
"It became a joke and not a very funny one," she said. 
Artie Lee Hinds, then and now a member of the Houston Municipal Art 
Commission, recalled that members of the advisory body abhorred the sign. 
"They didn't like it," she said. "It wasn't that the sign wasn't 
good-looking. The art commission didn't want any signs on any buildings, and 
this one was revolving around." 
Members of the commission quietly urged Gulf management to remove the sign as 
a public service. 
Today, such a sign, which finally came down in 1975, never would pass muster 
with a city ordinance that regulates sign height and size. 
Critics never warmed to the Gulf sign as they did - begrudgingly, perhaps - 
to the giant red neon Pegasus that revolved above the old Magnolia Oil Co. 
headquarters in Dallas. 
"The Pegasus is interesting," said Rice University architectural historian 
Stephen Fox. "I don't think the Gulf sign was offensive in any way. But it 
never claimed people's affection as a civic symbol the way the Magnolia 
emblem did in Dallas. It basically was a transposition and magnification of a 
Gulf filling-station sign. There was nothing special, nothing especially 
Houston about it." 
While the details of why the gargantuan sign was erected in the first place 
probably are lost to history - many of those involved in the project are dead 
- Fox suggested Gulf simply may have been trying to regain its lost 
prominence on the Houston skyline. 
When the sign was erected, Gulf, which traced its history to the 1901 
discovery of oil at Spindletop, occupied a striking old bank building at Main 
and Rusk streets. 
Built in 1929 and standing 450 feet in height, it long had been the tallest 
building west of the Mississippi River. In 1963, though, Gulf's tower was 
eclipsed by the 600-foot-tall headquarters of the Humble Oil and Refining Co. 
(now Exxon Mobil) at 800 Bell Ave. 
The orange disc brought the Gulf Building's height to more than 500 feet - 
still short of Humble's height but topping its rival in garishness and 
illumination. 
By the time Z.D. Bonner became president of Gulf Oil - United States in the 
early 1970s, criticism of the sign had reached a crescendo. 
"It certainly was not an asset," Bonner said. "We had very few people - aside 
from those in the Gulf marketing department - who really liked it. And there 
were mechanical problems with it. It had suffered wind damage." 
When the massive porcelain panels were dismantled - a process Hink said took 
about a month - workers were surprised to find they were pockmarked with 
bullet holes. 
"We got a letter of commendation from some civic association for taking it 
down," Bonner recalled. 
The sign was replaced with a helicopter pad, which remains atop the building. 
Gulf Oil Co. lost its corporate identity in a mid-1980s merger with the San 
Francisco-based Chevron Cos. 
About the time the Houston sign was dismantled, Dallas' neon flying horse - 
erected in 1934 for an oil convention - was donated to the city. It was 
welded in place to keep it from toppling. In 1997, its neon lights went dark, 
victims of the elements and neglect. 
Admirers of the sign raised $600,000 from individual and corporate donors - 
including Magnolia's descendant, Exxon Mobil - to replace the 15-ton sign 
with a replica. The new sign was illuminated at the stroke of midnight on New 
Year's Day 2000. 
No such resurrection was in the cards for the Gulf sign. 
Its porcelain panels were taken to Hink's workshop on the city's northwest 
side. Hink kept the small "R" from the sign's trademark emblem for himself 
and donated the rest to an employee who wanted to use the panels to build a 
barn. 
The barn was built, but the worker since has died, and Hink no longer 
remembers where the farm was located.


Photos: 1. Sign maker Sherman H. Hink poses with a miniature Gulf service 
station sign, model for the 83-ton neon sign that for nearly a decade rotated 
atop the company's downtown office tower. At right is the giant sign's 
trademark emblem - the only part of the controversial landmark that was 
preserved; 2. Known as "The Lollipop," Gulf Oil Co.'s rotating orange, white 
and blue logo towered above most other downtown buildings in the 1960s and 
early '70s. It was removed in 1975. 


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


BUSINESS
THE NEW POWER / Returns on investments too slow in developing nations
JENALIA MORENO, MICHAEL DAVIS, JANAKI BAHADUR KREMMER
Staff

04/15/2001
Houston Chronicle
2 STAR
8
(Copyright 2001)

JUST A FEW years ago, Enron Corp. focused its international operations in 
developing markets such as Maputo, Mozambique, and Bombay, India. 
Today, top executives for the Houston-based giant are more likely to fill 
their passports with stamps from London, Tokyo or Sydney.
As in many other public energy companies, a keen interest in building 
pipelines and power plants in Third World nations while earning a slow rate 
of return has been replaced with a drive to deliver more money, faster to 
shareholders, analysts said. 
That's led to a for-sale sign on many of its international operations. 
Enron and analysts believe the company's international fortune lies in 
creating markets for gas, electricity and almost anything else that they can 
profitably trade. Outsiders say building big power plants has been a 
profitable line of business for them, but it ties up too much money. 
"We're perfectly happy to make our way along by buying and selling from other 
people who have power plants," said John Sherriff, president and chief 
operating officer of Enron Europe. 
More than a year ago, Japan opened up 30 percent of its electricity market to 
competition. The island nation charges some of the highest power rates in the 
world, and Enron is eager to get into that market. 
Enron Chairman Ken Lay said he is hopeful, despite a relatively slow start, 
because he senses a change in attitude on the part of Japanese business 
leaders. 
Enron already has set up a joint venture to market the power of some 
privately owned power plants, and Enron's broadband network will be tied into 
Tokyo by the end of the year. Hong Kong, Singapore and India will follow. 
"There is a much greater sense of urgency to make changes and get their 
economy competitive with the U.S. economy and other economies around the 
world," Lay said. 
Europe also is opening up its energy market. 
Enron's annual report last year predicted: "In just a few years, the 
competitive European wholesale power market will rival the size of the power 
sector in the United States. Enron expects to assume the leading position in 
Europe as it has done in North America." 
In 1989, Enron chose Europe for its first international foray. 
"We didn't really tiptoe into the market," said Sherriff. "We really came 
into it in a big way." 
Today, Enron employs 4,000 people in Europe. 
Worldwide it operates in more than 30 nations. 
"Our business model works best when we're pretty sure we're going to get 
paid, where there's a rule of law, where there's a lack of bribery," said 
Sherriff, explaining why the company does not operate in most Eastern 
European countries. 
Such ventures in developing countries could reap significantly higher returns 
than power plants in India, where the company has faced everything from 
accusations of human rights violations to bureaucratic red tape. 
But analysts and critics alike question whether the move to the safer haven 
of developed nations is because of a series of troubles with big energy 
projects in developing markets. While outsiders have long followed Enron's 
battles over its power electric plant in the Indian city of Dabhol, its 
problems with the Asian nation go beyond that. 
Plans for trading in bandwidth by building a broadband telecom network with 
971,000 miles of fiber-optic cable connecting four Indian cities also have 
been put on hold. 
"Due to the lengthy delay and continued disagreement on critical commercial 
and legal issues, Enron has determined that its involvement (in the 
fiber-optic venture) is no longer financially viable," said John Ambler, an 
Enron spokesman. 
"Since we tend to focus on the more open and developed markets, it is too 
early to determine whether the market will open in an acceptable time frame 
in India," he added. 
While analyst Subhash Agarwal, editor of India Focus, a political risk 
magazine, sees Enron concentrating elsewhere, he says opportunities still 
exist in India. 
"They are clearly shifting away from asset-owning to trading in the energy 
business, but a lot still needs to be done in India before they can freely do 
that here," Agarwal said. 
The problems they have faced in the electricity business help explain why 
they are wary about such commitments. 
Analysts said selling less-profitable assets is all part of Enron's strategy 
of frequently changing its businesses, which has been a cornerstone of its 
success. 
"You're never going to win on every single investment, but Enron is usually 
smart enough to know when to get out," said Rebecca Followill, an analyst in 
Houston for Howard, Weil.

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

BUSINESS
THE NEW POWER / Working environment now driven more by new ideas than old 
doctrine
MICHAEL DAVIS
Staff

04/15/2001
Houston Chronicle
2 STAR
6
(Copyright 2001)

FOR CLAUDE TELLIS, working at Enron Corp. has meant being able to develop an 
idea, pitch it to his bosses and see it through to success. 
Within a year of joining the company, Tellis was one of a group of employees 
who put together Enron Investment Partners, a venture- capital fund that 
specializes in bankrolling minority- and women- owned businesses. It started 
with $40 million to invest, and that's expected to grow to some $300 million.
Tellis was given the chance even though his idea had nothing to do with Enron
's main businesses. He just had to prove that the concept was viable and then 
be willing to work to make it happen. 
Tellis explains it all by saying: "Enron is a meritocracy." 
An open attitude toward new ideas is often cited as one of the key components 
to the success of Enron as the company continually reinvents itself. 
The associates program, in which Tellis operates, is one of the best examples 
of this attitude. Recent MBAs are rotated through various Enron businesses 
for two years, allowing them to decide where they might best fit in at the 
huge company. 
The person largely responsible for the program as it is today is Jeffrey 
Skilling, recently named chief executive officer. 
Although Enron has had programs for incoming MBAs for most of its history, it 
was after the arrival of Skilling in 1990 that the associates program really 
took off. 
"We created a whole new culture," Skilling says. "We knocked down a lot of 
walls, literally." 
Skilling and others running Enron often single out employees such as Tellis 
as being the future of the company as it chases an ever- growing number of 
markets. Skilling has likened the recruiting to an arms race. 
"We realized early on that the name of the game was technology and brains," 
Skilling said. 
All of which sounds like a logical approach. But Tellis learned from hard 
experience that the culture in other companies is not always so accommodating 
to new hires. 
After getting his undergraduate degree from Duke University, he was eager to 
get into deal-making and went to work for one of the nation's biggest 
business consulting firms. 
"They told me to think outside the box, but the only box I was in was a Power 
Point box," Tellis said, referring to the popular software used for 
presentations. Rather than being put on deal teams, he was relegated to 
putting together slide presentations for higher- ups. 
He returned to college and earned his master's of business administration 
from The Wharton School at the University of Pennsylvania. Soon after, he was 
hired by Enron and joined the associates program. 
The expansion of the associates program in the early 1990s was accompanied by 
a change in the layout of Enron's offices to reflect a more open corporate 
culture. Skilling wanted to express a sense of equal opportunity by 
advocating an environment where everyone operated in an open office space. 
Skilling also began to offer an axiom to new employees wanting to propose new 
ideas: The quality of an idea is usually proportionate to its distance from 
the 50th floor. 
The 50th floor is where Enron's top executives, including Skilling, have 
their offices. 
The concept of an open office in the energy industry was revolutionary in the 
early 1990s, said Bob Bruner, a professor at the University of Virginia who 
has done a case study on Enron's evolution. Companies that operate in 
regulated businesses tend to be very bureaucratic, and Enron was no exception 
in its early days, he said. 
"Enron had to become a new animal. This meant that it had to shed layers of 
organization," Bruner said. "They shed lots of little things like offices 
that went with titles and created the open- office concept." 
Not all of the cultural changes at Enron have been met with a warm reception 
from employees. A new evaluation system being used at the company is 
considered by some to be divisive rather than supportive. 
This so-called "horizontal" evaluation process has angered some employees who 
think it pits employees against each other. Under the system, employees are 
required to spend about two weeks out of the year ranking their fellow 
employees in five categories. 
The process has been referred to as "rank and yank," and can be brutal, 
employees say - a corporate version of the television show Survivor in which 
workers can gang up on others they may not like for whatever reason. 
The new evaluation program is a good example of how Enron can be a tough 
place to cut it for those not determined to work harder than the rest. It 
also is regarded as an employer that can often overwhelm its workers' 
personal lives. Ten- to 12-hour days are not that unusual at the company, 
former Enron employees say. 
Tellis normally puts in about a 10-hour day and frequently works weekends, 
but when a deal is about to close, Enron's downtown office becomes his second 
home. 
No matter how warm and fuzzy the Enron culture is presented to the public, 
the company clearly does not suffer fools gladly. 
When asked what sort of day he typically puts in at Enron, Tellis cast a 
nervous eye to the public relations person sitting next to him and asked, "Do 
I have to answer that?"


Mug: Claude Tellis 

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


BUSINESS
THE NEW POWER / Firm in a hurry to get into new downtown tower
RALPH BIVINS
Staff

04/15/2001
Houston Chronicle
2 STAR
7
(Copyright 2001)

ENRON CORP. is in a hurry. That is evident to anyone watching workers 
scurrying about to erect additional steel beams to the skeleton of the Enron 
Center South tower emerging on the downtown skyline. 
It will become even more evident this summer when Enron will begin moving 
1,000 employees into the building before construction is complete. While work 
continues above and below, Enron employees will be doing their jobs on the 
tower's third, fourth and fifth floors.
The 40-story tower going up across the street from the 50-story Enron Center 
North won't be complete until the summer of 2002. 
Finishing the elaborate 40-story office tower can't happen soon enough for 
William R. Donovan, the Enron vice president managing the construction 
project. 
Employees of the company, whose explosive growth made it the biggest in town 
in terms of revenues, are tightly packed into the current Enron building and 
have spilled over into other towers on the southwestern edge of downtown. 
"We need the space. We have just about soaked up about every square foot of 
short-term leased space within walking distance," Donovan said. 
When the tower is finished, the imprint of the corporate culture will be 
stamped into the new Enron Center South. 
At the heart of the 1.2 million-square-foot building will be massive trading 
floors that house the company's key business. These open spaces on the lower 
levels will be home to traders buying and selling everything from electricity 
to wood pulp, from natural gas to broadband communications capacity. 
The importance of those traders, and the company's open culture, also will 
shape the design of the offices of Enron Chairman Ken Lay and Chief Executive 
Officer Jeff Skilling. Their offices will be on the seventh floor overlooking 
the trading floors. Two curved grand stairways will connect their offices to 
where the action is. 
"I think it says a lot about how Ken Lay and Jeff Skilling view the 
corporation," meaning they don't want to be sequestered away, said architect 
Gregg Jones of Cesar Pelli & Associates, the New Haven, Conn., firm that 
designed the new tower. 
The company, which profits from the world's insatiable appetite for energy, 
is going to occupy a new headquarters that will reflect Enron's emphasis on 
energy efficiency, Jones said. 
The south, west and east sides of the building will be adorned with metal 
sunshades and fins that deflect the sun and lower energy costs. 
"You will be shading an entire skyscraper," Jones said. 
The building will be wrapped in bluish-gray glass that matches the Enron 
tower across the street. 
From aircraft flying above, the main tower of Enron Center South will appear 
to have the same shape as the Enron Center North building - sort of an oval 
shape with flattened sides. 
The ovalish shape will be a decorative theme that is repeated in Enron Center 
South in many ways. Tiny ovals will be etched into the glass of the windows 
in the building; small oval holes will be punched into the sunshades and 
replicated in the elevator doorjambs. 
A curved sky bridge will connect the two buildings and the 15- level parking 
garage that is under construction at the corner of Bell and Smith. From 
above, the sky bridge will look like a ring around Saturn. The designers were 
hoping the circular tube would create something more than than "just another 
gerbil tube" between towers, Jones said. 
With the new building, Enron is creating an urban corporate campus. It will 
have a wide array of services for its employees, from child care to medical 
care to on-site food services. The ground floor will have restaurants, retail 
space and a 240-seat auditorium. 
The company that is rushing to get into the new building already has 
long-term plans for another building. Donovan said Enron owns a full block 
downtown bounded by Bell, Leeland, Louisiana and Milam where the third tower 
could be built, if needed. 
Enron hired the Cesar Pelli firm to help make its statement on the Houston 
skyline. The firm, led by Pelli, the former dean of the architecture school 
at Yale University, designed the one of the tallest office projects in the 
world, the Petronas Towers in Kuala Lumpur, Malaysia. 
In Houston he designed a number of prominent buildings, including the St. 
Luke's Medical Towers in the Texas Medical Center, whose twin spires look 
like hypodermic needles to many Houstonians. 
He also designed the Four Oaks Place office towers and Four Leaf condominium 
towers near the Galleria. 
In a few months, when the exterior skin of Enron Center South is applied, it 
will give the tower a notable place in the downtown skyline. 
"It's going to be very elaborate. It's not going be that minimalistic 1980s 
architecture," Donovan said. "It's going to be a much, much more ornate 
facade than I think downtown has seen in 50 years."


Photo: A view from Smith Street of the new 40-story Enron Center South tower. 
Although construction will continue on some floors until summer 2002, the 
company plans to move 1,000 employees into the building this year 

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

BUSINESS
THE NEW POWER / Current lineup
Staff

04/15/2001
Houston Chronicle
2 STAR
7
(Copyright 2001)

ENERGY TRANSPORTATION AND UPSTREAM SERVICES: This group was the starting 
point for Enron. It runs its natural gas pipelines, storage facilities, 
compression services and gas processing and treatment facilities. 
ONLINE MARKETPLACE SERVICES: This unit is built around Internet marketing and 
trading sites where a vast range of commodities are bought and sold. It also 
includes services such as ePowerOnline, where users of Enron broadband 
services can monitor their accounts, and Enron Direct, where European 
customers can strike long-term wholesale contracts for natural gas and power.
ENERGY AND COMMODITIES SERVICES: This operation buys and sells such 
commodities as power, natural gas, pulp and paper, coal, emissions credits, 
plastics and petrochemicals, steel, crude oil and wind power. 
BROADBAND SERVICES: This venture buys and sells capacity on broadband 
networks so companies can buy time to ensure high-quality transmissions of 
data across the country. This operation also includes a media services 
business in which companies can hedge the costs of buying advertising space 
and streaming media applications through which TV-quality video can be 
delivered to large audiences live or on demand. 
CAPITAL AND RISK-MANAGEMENT SERVICES: This group offers a wide range of 
financial instruments such as hedges and swaps that allow companies to manage 
the volatility of price swings for a commodity that they buy regularly. It 
also includes a corporate finance arm. 
COMMERCIAL AND INDUSTRIAL OUTSOURCING: Commercial and industrial outsourcing 
includes Enron energy services, which supplies and manages energy usage for 
large businesses. It also provides software for energy management as well as 
on-site personnel to manage facilities for customers. 
PROJECT DEVELOPMENT AND MANAGEMENT: This business develops, finances, builds 
and manages such things power plants, pipelines, water, wind power, and oil 
and gas exploration and production. These projects normally are done with 
partners.


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

BUSINESS
THE NEW POWER / Enron's chronology
Staff

04/15/2001
Houston Chronicle
2 STAR
6
(Copyright 2001)

1985 - Houston Natural Gas merges with Omaha, Neb., -based InterNorth to 
create the company that would eventually be named Enron Corp. The deal 
integrated several pipeline systems to create the first nationwide natural 
gas pipeline system. 
1986 - Ken Lay, who had been chief executive officer of Houston Natural Gas, 
is named chairman and chief executive officer. The company chooses the name 
Enron after rejecting Interon.
1987 - Enron discovers that oil traders in New York have overextended the 
company's accounts by almost $1 billion. The company ultimately worked this 
loss down to $142 million. This leads to Enron developing a myriad of 
services to help reduce the risk of price swings for everything from gas to 
advertising space. 
1988 - Enron opens its first overseas offices in England to take advantage of 
the country's privatization of its power industry. 
The company's major strategy shift - to pursue unregulated markets in 
addition to its regulated pipeline business - is revealed to executives in a 
gathering that became known as the "Come to Jesus" meeting. 
1989 - Jeffrey Skilling joins the company and Enron launches its Gas Bank, a 
program under which buyers of natural gas can lock in long-term supplies at 
fixed prices. The company also begins to offer financing for oil and gas 
producers. 
1992 - Enron acquires Transportadora de Gas del Sur. It was Enron's first 
pipeline presence in South America and the start of a push to expand on the 
continent. 
1993 - Enron's Teesside power plant in England begins operation, one of the 
first big successes for the company's international strategy. 
1994 - Enron makes its first electricity trade, beginning what will turn out 
to be one of the company biggest profit centers in the next few years. 
1995 - Enron Europe establishes a trading center in London, marking the 
company's entry into European wholesale markets. Europe is now considered one 
of the company's prime growth markets. 
1996 - Construction begins on the first phase of the Dabhol power plant in 
India. The $2 billion project would be plagued with political problems 
throughout its construction and those problems continue today. 
1997 - To expand its electricity business, Enron buys Portland General 
Electric Corp., the utility serving the Portland, Ore., area. 
Enron Energy Services is formed to provide energy management services to 
commercial and industrial customers. 
1998 - Enron acquires Wessex Water in the United Kingdom, which forms the 
basis for its water subsidiary Azurix. 
1999 - Enron forms its broadband services unit. The first phase of the Dabhol 
project begins operations. One-third of Azurix is sold to the public in an 
initial public offering. After an early rise, shares fall sharply as the year 
goes on and the problems facing the company become apparent. 
Enron Online, the company's commodity trading Internet site, is formed. It 
quickly becomes the largest e-business site in the world. Enron Energy 
Services turns its first profit in the fourth quarter. 
2000 - Rebecca Mark resigns from her position as Azurix chairwoman and the 
company announces a plan to take the troubled water subsidiary private. 
Annual revenues reach $100 billion, more than doubling from the year before, 
reflecting the growing importance of trading. 
Enron Field is opened in downtown Houston. In addition to buying the naming 
rights, Enron Chairman Ken Lay helped raise financial support for the 
construction project. 
2001 - Skilling is named chief executive officer. Lay remains chairman of the 
board.


Photos: 1. Jeffrey Skilling; 2. Enron's power plant in Dabhol, India, under 
construction in 1998; 3. Rebecca Mark in 1998 (p. 7); 4. Fans file into Enron 
Field, a symbol of the company's prominence (p. 7) 

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


Money and Business/Financial Desk; Section 3
GRASS-ROOTS BUSINESS
Oil-Patch Epicenter, Embracing the Web
By JOEL KOTKIN

04/15/2001
The New York Times
Page 6, Column 1
c. 2001 New York Times Company

HOUSTON -- AS the daughter of an oil-field supplier in Lake Charles, La., two 
and a half hours from this booming energy capital, Claire S. Farley says she 
always knew she would end up in the business herself. Often the only woman in 
her geology classes in college, Ms. Farley did eventually become one of the 
few top executives in the energy industry who are women. She held several 
high-level positions at Texaco, including president of North American oil and 
gas production. 
Today, Ms. Farley, 42, finds herself and the company where she is chief 
executive, Trade-Ranger, in another pioneering role. Trade-Ranger, which 
provides Internet-based business-to-business services to energy companies and 
suppliers, is part of a growing information sector that is rapidly 
transforming both the energy industry and this historically blue-collar city.
Energy companies have tended to be insular, Ms. Farley said, conducting most 
of their basic research and development internally. But to take advantage of 
new information technologies, she said, they increasingly look to new 
businesses like hers. Trade-Ranger, whose clients include 15 major energy 
companies, helps manage transactions between those companies and key 
suppliers over an Internet-based global network. 
It is a potentially huge business, she said, adding that global energy 
companies spend more than $500 billion a year procuring most anything from 
pipes to computer services. ''Fundamentally, the people in this business are 
looking for information and economies of scale,'' she said, pointing to a 
need to buy large quantities of goods and services at the best available 
prices. ''Ten years ago, they would have done this themselves, but now they 
are looking for people who can give them solutions.'' 
In a broader sense, Houston-based companies like Trade-Ranger and the 
PetroCosm Corporation, a rival whose founders include Chevron, are part of a 
rising tide of technology businesses connected to the energy industry. As 
technology companies, especially Internet businesses, are collapsing in 
places like San Francisco and New York, energy-related technology concerns 
have not been as troubled by the collapse of the Nasdaq or weakening investor 
confidence. 
Trade-Ranger, founded last summer, has more than $90 million in venture 
capital from energy companies like Royal Dutch/Shell and BP Amoco. That money 
lets the company invest heavily in new technology. 
But it is not just Internet companies that are thriving here. Other 
technology companies -- in fields as different as geology and market analysis 
-- are also growing rapidly. 
That is a major departure from previous energy expansions, like the boom of 
the 1970's, when growth came largely from manufacturing oil-field equipment 
or dispatching riggers around the world. Barton Smith, an economics professor 
at the University of Houston, said that much of what Houston needs today, and 
is selling to the world, is technological and managerial expertise. 
RECENT employment numbers reflect the trend. Over the last three years, the 
fastest rate of job growth in Houston has been concentrated in business 
services, as well as engineering, accounting, research and management 
services. In contrast, the traditional energy sector, which includes oil 
companies and businesses directly engaged in mining, gained only 10,000 jobs 
last year, well below historical highs. 
''Houston's energy economy is increasingly high tech,'' Mr. Smith said. 
''It's white collar, not blue collar.'' 
Other evidence of a white-collar expansion can be seen in the office market. 
New office towers, including headquarters for energy businesses like Enron 
and Reliant Resources, have been rising downtown. Vacancy rates in the 
central core, as high as 30 percent in the late 1980's, have dropped into the 
single digits. Once a ghost town after hours, downtown is starting to become 
a more popular destination, and increasingly a residential hub, for young 
professionals. 
The surge in technology-related employment is also spreading across the vast 
greater Houston area, which is larger than all of New Jersey. Much of the 
most recent growth has been beyond the city limits, a periphery that is home 
to nearly 2.7 million of the region's estimated 4.6 million residents. 
''The growth is becoming inevitable,'' said David Wolff, president of the 
Wolff Companies, a developer in the energy corridor along the city's western 
suburbs. ''The billings are increasing at all the energy companies -- that's 
billions in new spending coming on line.'' 
THE new wealth has created a large middle class of accountants, lawyers and 
other professionals, many of them directly or indirectly serving the energy 
industry. More fashionable boutiques and high-end restaurants are opening 
throughout the area, joining places like the Galleria -- west of downtown -- 
the shopping and office center where Trade-Ranger is based. ''Houston,'' Ms. 
Farley said, ''is becoming chic.'' 
The shift away from a blue-collar base extends even into the industry's 
historic core -- the wildcatters. Once identified with roughnecks and 
seat-of-the-pants entrepreneurs, the exploration industry now relies more on 
sophisticated sensing and computer-modeling technology than on elbow grease. 
Companies like Davis Petroleum, which explores largely in the Gulf of Mexico, 
depend increasingly on such technologies to uncover oil and natural-gas 
supplies. The family-owned business, which has grown to 50 employees from 20 
in the last five years, now includes 10 highly paid scientists. ''There's a 
tremendous amount of data generated in this business and a huge paper 
trail,'' said Gregg James Davis, the company's president. ''To be efficient, 
you have to get down to the digits so you can make better guesses as to where 
to drill.'' 
Deregulation of energy prices has also increased demand for sophisticated 
trading information, said Jay P. Lukens, 46, president of the Lukens Energy 
Group, which provides information and trend analysis on energy prices, as 
well as advice for mergers and acquisitions for major utilities and 
generators. 
Founded in 1999, Lukens has grown to 20 employees, from 6, virtually all of 
them with graduate degrees. The company uses the latest computer-modeling 
technology for utilities and energy concerns, including the Williams 
Companies, Alberta Energy and BP Amoco. Lukens's billings are rising to an 
estimated $6 million this year from $2 million two years ago. 
Mr. Lukens says, however, that his company remains an energy business at 
heart. ''We have the software,'' he said, ''but what we are selling in 
reality is knowledge of the market itself.'' 
Such expertise, Ms. Farley said, will give Houston a competitive edge. Even 
if oil prices drop, major energy companies merge and most new drilling 
continues to take place thousands of miles from the Texas coast, she predicts 
that the city's new technology-oriented energy sector will continue to 
expand. 
''Houston now sells its expertise,'' said Ms. Farley, whose major investors 
are from outside of Texas. ''Why not London or Los Angeles? Why, it's the oil 
business -- it has to be in Houston. Everyone you know who's important in 
this business passes through here. It's where the information is.''


Photos: Lukens Energy supplies software to companies like Aquila Energy, a 
natural-gas wholesaler. Bryon Jobe, above, is lead operator in an Aquila 
control room near Katy, Tex. Part of the distribution system is outside. 
(Photographs by Phillippe Diederich for The New York Times) 

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


Sierra Pacific Suspends Quarterly Payout Because of Energy Crisis in Western 
States
By Rhonda L. Rundle

04/15/2001
Dow Jones Business News
(Copyright (c) 2001, Dow Jones & Company, Inc.)

Staff Reporter Of The Wall Street Journal 
Sierra Pacific Resources, which owns two Nevada utilities, said it suspended 
its quarterly dividend, citing high power costs and other fallout from the 
energy crisis afflicting the Western part of the U.S.
The utility holding company said it still hopes to complete a $2 billion 
agreement to purchase Enron Corp.'s Portland General Electric unit. The 
transaction, which will also include the assumption of $1 billion in debt, 
has been delayed partly because of a new California law that has blocked 
Sierra Pacific (SRP) from raising funds through planned sales of certain 
power-generating assets. 
Sierra Pacific has paid a quarterly dividend of 25 cents in recent quarters. 
Suspension of the payout will save "less than $20 million -- but every dollar 
counts at times like this," said Mark Ruelle, senior vice president and chief 
financial officer. The dividend policy will be reviewed again at the next 
board meeting, set for May 21, the company said. 
Sierra Pacific, based in Las Vegas, said it is continuing several 
cost-control programs that were recently undertaken to reduce expenses. The 
cutbacks are mainly in the area of administrative expenses and include 
elimination this year of incentive pay for executive staff. 
Sierra Pacific, like utility owners in other Western states, has been hit by 
rising energy costs. Sierra Pacific has said it incurred an unanticipated 
expense of $889 million in 2000 to purchase fuel and electricity on the open 
market. That produced a full-year 2000 loss of $39.8 million, or 51 cents a 
share. 
Copyright (c) 2001 Dow Jones & Company, Inc. 
All Rights Reserved.

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


India: Report cautions Maharashtra on PPAs
Mahesh Vijapurkar

04/15/2001
The Hindu
Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - 
Asia Intelligence Wire

MUMBAI, APRIL 14. A caution that any effort to continue with the proposed 
power purchase agreements (PPAs) with Reliance and Mittals for major projects 
in Maharashtra "will only result in a problem similar to that of the Dabhol 
Power Company (DPC) re- emerging in future" has been sounded by the Madhav 
Godbole Committee. 
The committee - major findings of which have been publicised - expressed 
fears on "allowing these independent power producers to proceed, as currently 
structured". The two projects, one in Patalganga and another in Chandrapur, 
also have substantial import content.
These projects, the committee said, have to be "re- examined in accordance 
with a Least Cost Plan and in any case, till such time the demand level in 
the State permits full absorption of power" from these independent power 
producers. It may be recalled that all arithmetic, including demand 
projections by the MSEB, have gone awry in the Enron-sponsored DPC. 
Neither of the two projects is contractually structured to meet the needs of 
intermediate and peaking load in the MSEB or Maharashtra itself. The MSEB 
needs to justify projections in more detail "before proceeding with these 
projects", the committee said. The MSEB's power procurement policy till the 
Maharashtra Electricity Regulatory Commission stepped in was not according to 
a least-cost plan. In fact, the MERC's least-cost option unsettled the 
purchase option from the DPC, forcing it to limit the maximum offtake to 
around 50 per cent of the contractual obligation.

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


Graft vs graft: Political scene in state hits nadir
Ambarish Mishra

04/15/2001
The Times of India
Copyright (C) 2001 The Times of India; Source: World Reporter (TM)

MUMBAI: The opposition Shiv Sena-BJP combine, according to the Vidhan Bhavan 
grapevine, is ready with a videotape showcasing the escapades of a prominent 
minister in the ruling Democratic Front (DF) government. 
``With videotapes here, there and everywhere, we will have to build a preview 
theatre,'' remarked a senior official of the state legislature.
`Make hay with an allegation a day' seems to be the mantra in the corridors 
of power. With DF ministers and the opposition Shiv Sena-BJP bigwigs choking 
on allegations and running away at the mouth, Maharashtra's political sensex 
seems to have hit an all-time low. 
Charges and counter-charges, traded with the glee of a Dahyabhai from Dalal 
Street, have been taking up a considerable portion of the budget session's 
proceedings at a time when the state's financial health is precarious, to say 
the least, with more than 20,000 villages reeling under acute water scarcity. 
Also, the state administration is weighed down by a host of problems, 
including the prolonged strike of resident doctors, a worsening law and order 
situation and l'affaire Enron, not to speak of the bickerings within the 
eight-party ruling combine. 
``It is unfortunate that the assembly has been converted into an akhada. The 
trading of charges has, apart from vitiating the political atmosphere, 
lowered the prestige of the state legislature,'' said a former speaker of the 
legislative assembly. 
During the first two weeks of the budget session, which began on March 13, 
the Sena-BJP combine went bang bang bang targeting minister of state for 
public health Eknath Gaikwad, deputy chief minister Chhagan Bhujbal and chief 
minister Vilasrao Deshmukh. The Sena-BJP leaders flaunted affidavits filed by 
several youths in support of their claim that Mr Gaikwad's personal assistant 
had demanded money, right in the presence of the minister, as a quid pro quo 
for offering government jobs. 
Closing in on the chief minister, prominent BJP leader Nitin Gadkari, while 
speaking in the legislative council, accused him of having indulged in 
``corruption'' while finalising the purchase of a spinning mill in Latur, the 
CM's hometown. 
The Vilasrao Deshmukh ministry retaliated against Mr Gadkari, who belongs to 
Nagpur, with a threat to supercede the Nagpur municipal corporation on 
charges of, what else, bhrashtachaar (graft). 
Moreover, the ruling DF alliance accused leader of the opposition Narayan 
Rane of having drained the state exchequer of a staggering Rs 124 crore by 
gifting away a government plot to Esselworld in 1996 when Mr Rane held the 
revenue portfolio in the Manohar Joshi cabinet. 
As if this was not enough, the treasury benches okayed the suspension of BJP 
MLAs. Although the suspension orders against five of the nine legislators 
have since been revoked, the coup de grace has embittered the Sena-BJP 
combine. ``The state government is plainly vindictive,'' declared BJP leader 
Gopinath Munde. ``The opposition should learn to behave,'' retorted a DF 
minister. 
More fireworks took place in the assembly last week, belying hopes that the 
house would take up issues of public importance for discussion and decision. 
A judgment by the division bench of the Bombay high court last Monday held Mr 
Rane guilty of condoning irregularities in a land de-reservation case. The 
verdict brought cheer in the DF camp. 
However, an unrepentant Mr Rane hit back with an allegation that Mr Bhujbal, 
who holds the home portfolio, and his close relatives had demanded a tidy sum 
from a senior IPS official in connection with his transfer. 
The plot thickened with the allegation by senior BJP leader Gopinath Munde 
that Mr Bhujbal had set free two COFEPOSA detenues for a hefty Rs 2 crore. 
And on to a new allegation on Monday, when the state legislature resumes 
business after a brief recess. ``Not a single charge is backed with foolproof 
evidence. Tehelka.com seems to have fired the imagination of Maharashtra's 
politicians,'' said the Vidhan Bhavan official, referring to the audiotapes 
which Mr Rane flaunted in the house while making out a case against Mr 
Bhujbal.

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


Editorial/Opinion
In an energy crisis, lean toward the green
Molly Ivins
Fort Worth Star-Telegram

04/15/2001
The News & Observer Raleigh, NC
Final
A27
(Copyright 2001)

BOULDER, Colo. -- At the annual World Affairs Conference at the University of 
Colorado, the assorted experts from around the globe may sometimes be wrong, 
but they are rarely in doubt. 
This lends a happy, "But the emperor isn't wearing any clothes," simplicity 
to much of the discussion. Shibboleths are ignored, obligatory bows to those 
who are only partially informed are skipped entirely, and folks get right 
down to the lick-log.
Thus, Harvey Wasserman, a longtime leader of the anti-nuclear movement, 
cutting to the chase: "Anyone who advocates nuclear power as a solution to 
our energy problems should be shut up in a padded cell." 
Wasserman can, of course, discuss the details of nuclear plant design, risk, 
insurance, regulation, waste disposal, etc., ad nauseam. It's just that he'd 
rather not waste his time on the obvious. 
One session I attended here not expecting to learn much new (but it's always 
nice to have your prejudices confirmed) was titled "Our Fake Energy Crisis: 
What Really Happened in California." 
The aforementioned Wasserman waded in with a will, describing the dastardly 
tale of ruthless utility companies determined to unload the "stranded costs" 
of their monumental folly in building nuclear plants - $20 billion worth in 
California's case - on the ratepayers. Given that utility lobbyists literally 
wrote the California deregulation bill, it's quite a reach to blame it on 
anyone else. 
This is a familiar tale to those who have read beyond the basic coverage of 
the California situation. Wasserman tells the story well, with a fine 
contempt for the greed and stupidity behind it all and for the politicians 
now seeking cover. But he presents a media mystery that has me stumped - one 
of those cases of the media overlooking the obvious so completely that one is 
bereft of a handy explanation. 
Some parts of California are not suffering from power problems of any kind. 
In Los Angeles and Sacramento, the lights are still on and the rates have not 
doubled or tripled. As it happens, the people of Los Angeles and Sacramento 
own their own power plants. This glaringly obvious fact has for some reason 
escaped media attention, except in California. 
The history of how utility ownership and regulation came about is crucial to 
this story. Wasserman quoted a 19th century mayor of Cleveland, Tom Johnson, 
who said, "If we don't control the electric utilities, they will control us." 
As is often the case with business and government regulation, it was the 
utilities themselves that asked for regulation, knowing full well that they 
could easily dominate state public utility commissions. "Regulation" evolved 
so that utilities were permitted to make 15 percent on invested capital - a 
tidy sum. 
This lasted until the early 1990s, when wholesale prices fell, tempting the 
utilities into deregulation. They dumped the stranded nuke costs on the 
ratepayers and made a promise in exchange - no rate increases - which they 
promptly broke when wholesale prices went up. Ask the people of San Diego. 
The performance of the suppliers in this case - Enron, Reliant, etc. - is 
already the subject of public inquiry. But the California utility companies 
were meanwhile shipping the recovered nuke costs to their parent companies. 
("We're still checking the DNA on those parents," said Wasserman.) And then, 
in a truly sublime move, the major California utility gave its executives 
huge bonuses just before it went into bankruptcy. 
Wasserman's suggested solution is that Californians should simply get 
themselves out of the grid by setting up municipally owned power companies. 
In rural areas, this can be done by counties or electric co-ops. He believes 
that what held the old system together for so long was not government 
regulation, which was always blatantly subject to manipulation by the 
utilities (as anyone who has ever covered a PUC can tell you), but rather the 
tension between the for- profits and the municipals. 
In the current issue of Business Week, the cover story is on Exxon Mobil's 
plan to take advantage of the "energy crisis." This would normally be funny, 
given that Exxon is in the oil business and (as most people outside the Oval 
Office are aware), the oil business has nothing to do with electricity. 
However, Exxon's acquisition of Mobil, which is rich in natural gas, 
unleashes a corporate behemoth of unprecedented size. Exxon also has a 
corporate culture that would give nightmares to "Chainsaw Al" Dunlap of 
business fame. 
Here are some interesting facts from the Rocky Mountain Institute: The 
cheapest source of new electricity is efficiency; the next cheapest is 
burning soft coal, which is a gross polluter; and the next cheapest after 
that is wind power - 2.5 cents per kilowatt- hour.


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