=DJ Enron Turns Internal Credit-Risk Tool Into New Product
Dow Jones, 04/04/01

Duke, Enron Get 1st-Qtr Profit Boost From California: Outlook
Bloomberg, 04/04/01

Edison, PG&E File to End Williams's Open-Market Sales (Update1)
Bloomberg, 04/04/01

Enron Europe Pres Sees NETA Boosting Trade Volumes
Dow Jones News Service, 04/04/01

CANADA: Enron calls on Ontario to open power market quickly.
Reuters English News Service, 04/04/01

BG Group: UK Court Rules In Favor Of Co Against Enron Unit
Dow Jones International News, 04/04/01

GERMANY: Enron starts online quotes for German gas market.
Reuters English News Service, 04/04/01

BG to get back 51 mln stg as House of Lords finds against Enron's Teesside Gas
AFX News, 04/04/01

Utilities' merger faces challenge 
The Oregonian, 04/04/01

Wholesale market bright for PGE 
The Oregonian, 04/04/01



=DJ Enron Turns Internal Credit-Risk Tool Into New Product
2001-04-04 17:19 (New York)



   By Christina Cheddar
   Of DOW JONES NEWSWIRES

  NEW YORK (Dow Jones)--With the number of corporate bankruptcies on the rise,
knowing the creditworthiness of one's customers is becoming more and more
important.
  For Enron Corp. (ENE), the world's largest energy trading company, keeping
track of credit risk has always been part of doing business. That became even
more true with the company's launch of EnronOnline, its Internet-based
commodities trading network.
  In order to deal with the accelerated volume and speed of transactions on
EnronOnline, the company developed a tool to help its own commercial traders
manage the credit risk.
  Early last year, Enron rolled out this tool, Enron Credit, on a limited
basis. Gradually, the company expanded its use and scope. Last month, the
company re-launched Enron Credit in its current format.
  Enron Credit tracks more than 10,000 companies, giving each a rating known 
as
the "Enron cost of credit." The rating is expressed as an interest rate.
  The Web site also provides news, a company's expected chance of bankruptcy
and other related information.
  While much of this information is free to registered users, Enron also has
turned the product into a new revenue stream.
  Users may download data into a spreadsheet and receive periodic updates for 
a
fee.
  The site also can sell a user a "digital bankruptcy swap," which is a way to
hedge against credit exposure.
  The price of the swap is determined by a rating Enron's staff assigns to a
company and the amount of credit exposure a company needs to protect against.
  For a supplier, the main advantage of a swap is that if a customer is unable
to pay due to bankruptcy, the supplier will be paid immediately.
  According to Enron Europe President John Sherriff, the goal of Enron Credit
is to create a more efficient credit market by increasing trading liquidity.
  The tool is important because "in just a short amount of time, a company's
credit can go from stellar to bad literally overnight."
  At present, some analysts haven't factored in revenue from Enron Credit into
their earnings models. However, as the commodity markets Enron trades in
mature, it is possible the need for products such as Enron Credit could
increase.
  -By Christina Cheddar, Dow Jones Newswires; 201-938-5166;

Duke, Enron Get 1st-Qtr Profit Boost From California: Outlook
2001-04-04 17:21 (New York)

Duke, Enron Get 1st-Qtr Profit Boost From California: Outlook

     Houston, April 4 (Bloomberg) -- Duke Energy Corp., Enron
Corp. and other power sellers continued to reap the benefits of
California's electricity shortage in the first quarter, with some
bringing in record profits, analysts said.
     Duke, which owns generation in California that can light more
than 3 million homes, had an 18 percent increase in per-share
profit, forecasters say. Earnings at Enron, which sells
electricity and natural gas in California and helps companies
protect themselves from the risks of energy price movements, rose
about 13 percent, analysts estimated.
     Jeffrey Skilling, chief executive of Houston-based Enron,
said demand is rising for the Houston-based company's business of
helping companies cut energy costs by reducing consumption and
finding lower-priced suppliers.
     ``We're seeing the positive effect of the chaos going on out
in California,'' Skilling told investors in March.
     California officials and consumers have criticized energy
suppliers for profiting from their crisis.
     Power prices in the state averaged nine times higher in the
quarter than a year earlier because a shortage of power plants
limited supplies, and generators demanded higher payments to
offset the risk of selling to the state's near-bankrupt utilities.
     Most of the big suppliers sell electricity worldwide and
insist California is a small part of total sales. Dynegy Inc.,
which for example, has said California power sales accounted for
about 15 percent of last year's profit in marketing and trading.

                           Higher Prices

     Dynegy said on Monday that first-quarter profit rose to 40
cents a share from 26 cents a year earlier because of increased
demand and higher energy prices. The Houston-based company was
expected to earn 31 cents.
     San Jose, California-based Calpine Corp. said Thursday it
earned almost twice as much as it had forecast to analysts in the
quarter, helped by sales in California. Calpine said it made 20
cents to 25 cents a share, about three times as much as it earned
a year earlier.
     Atlanta-based Mirant Corp. said March 14 it would earn 46
cents to 48 cents a share in the quarter, more than twice as much
as expected, because of gains in its natural gas and electricity
business in the U.S. West.
     Avista Corp., which also sells energy in the western U.S.,
said in March it would earn 33 cents to 35 cents a share in the
quarter, more than the 30-cent average estimate of analysts polled
by First Call/Thomson Financial.
     Enron said in March it expected to earn $1.70 to $1.75 this
year, but wouldn't break out first-quarter estimates. First Call
estimates are that Enron will make 45 cents a share, up from 40
cents a year earlier.

                         Seeking Payments

     Enron's shares fell 30 percent in the quarter, partly on
concern about debts owed by customers in California. Investors
questioned whether Enron and others would be paid for power and
gas they delivered to the utilities owned by PG&E Corp. and Edison
International.
     The utilities have more than $14 billion in debt because
regulators wouldn't allow them to pass on all of soaring power-
buying costs to consumers. Prices jumped as high as $3,000 a
megawatt-hour in December -- about 100 times normal levels --
because of the power shortage, cold weather and high natural-gas
prices.
     California regulators approved a $4.8 billion annual rate
increase on March 27 to help PG&E and Edison pay the bills. The
rise isn't expected to cover all the power-buying costs. PG&E and
Edison have delayed reporting fourth-quarter earnings because of
their financial problems and haven't said when they'll report
first-quarter results.
     Several suppliers agreed during the first quarter to sell
electricity to California, which is buying on behalf of nearly
bankrupt PG&E and Edison. The contracts' average price is less
than half the average price utilities paid last year, but more
than double the average price in 1999.
     In the fourth quarter, power suppliers, including Duke and
Reliant, set aside money for bills they might not be able to
collect from California customers. Duke offered in March to take
less money if given guarantees of payment for the power it sold.

                           Summer Boost

     California could endure blackouts this summer if more
generation isn't built quickly.  Generators may see even bigger
profits then than in the winter, analysts said.
     Harvey Padewer, president of Duke's energy-services division,
said the summer shortage could total as many as 10,000 megawatts,
enough to light 10 million homes.
     Water reservoirs in the Pacific Northwest, which fuel
hydroelectric power plants that supply California, will be at
their lowest levels in history going into the summer, Skilling
said. That's because the water was used to produce power in
January, when it's not normally needed, to avert blackouts.
     That puts the summer burden primarily on gas-fired plants.
Gas prices skyrocketed last year because of increased demand for
the power-plant fuel.
     ``If we have a warm summer this summer, I think natural gas
has a lot of escalation left to do,'' Skilling said in a recent
speech in Dallas.
     The power shortage in California, the most populous state,
may impact energy prices across the country, analysts said.
     ``There are going to be good earnings for people who have
plants across the country and for people marketing gas across the
country,'' Salomon Smith Barney analyst Raymond Niles said.


Company                  1st-Qtr        Year-ago       Number of
                         Estimate       EPS            analysts

AES Corp.                $0.43          $0.42          6
Avista Corp.+**          $0.30-$0.35    $0.20          2
Calpine Corp.**          $0.20-$0.25    $0.07
Duke Energy Corp.        $0.58          $0.49          4
Dynegy Inc.**            $0.40          $0.26
Edison International     N/A            $0.32          N/A
Enron Corp.              $0.45          $0.40          13
Mirant Corp.**           $0.46-$0.48    $0.28
PG&E Corp.               N/A            $0.78          N/A Reliant
Energy Inc.      $0.66          $0.47          1
Sempra Energy            $0.49          $0.49          3
Williams Cos.**          $0.65-$0.75    $0.30

Estimates based on surveys by First Call/Thomson Financial and
IBES International Inc. Year-ago numbers supplied by First Call.

+ Numbers from IBES.
** Estimates provided by companies, not by analysts

--Margot Habiby in Dallas, (214) 740-0873 or
mhabiby@bloomberg.net, through the Princeton newsroom (609) 279-
4000/slb/alp



Edison, PG&E File to End Williams's Open-Market Sales (Update1)
2001-04-04 17:14 (New York)

Edison, PG&E File to End Williams's Open-Market Sales (Update1)

     (Adds Williams comment in fourth paragraph. For more on the
California energy crisis, see {EXTRA <GO>}.

     Washington, April 4 (Bloomberg) -- PG&E Corp. and Edison
International, owners of California's two largest utilities, asked
federal regulators to stop Williams Cos. from selling power at
market-based rates in the state.
     PG&E's Pacific Gas & Electric and Edison International's
Southern California Edison filed with the U.S. Federal Energy
Regulatory Commission to stop Williams's California power sales at
rates that aren't ``just and reasonable,'' the filing said.
     Tulsa, Oklahoma-based Williams, a natural-gas pipeline
company that's become one of the largest U.S. energy traders, was
licensed to sell power at market rates in California in March
1998. The utilities say Williams and other generators can
manipulate electricity prices.
     Williams spokeswoman Paula Hall-Collins said she couldn't
comment on whether the company would continue to sell power in
California if it had to do so at prices set by federal regulators.
     The average price of electricity in the California-Oregon
border region rose ninefold last quarter from a year ago,
according to Bloomberg Energy Service statistics.
     Other companies selling power in California include Duke
Energy Corp., Enron Corp., Reliant Energy Inc., Calpine Corp., El
Paso Corp. Mirant Corp. and AES Corp.
     Edison, based in Rosemead, California, and PG&E, based in San
Francisco, have lost more than $14 billion buying power in the
open market at prices that far exceeded what they could charge
customers.
     Williams sells gas to AES Corp., the largest U.S.
power-plant developer, to fuel California generators, and also
sells the power from those plants in the open market.
     Shares of Williams rose 11 cents to $40.26. PG&E rose 12
cents to $11.65, and Edison rose 16 cents to $12.98.

--Mark Johnson in Washington, (202) 624-1849 or
mjohnson7@bloomberg.net, through the Princeton newsroom,
(609) 279-4000/slb/pjm



Enron Europe Pres Sees NETA Boosting Trade Volumes
By Christina Cheddar
Of DOW JONES NEWSWIRES

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

NEW YORK -(Dow Jones)- Enron Europe President John Sheriff expects the U.K.'s 
New Electricity Trading Arrangements, or NETA, to lead to "dramatically" 
higher power trading volumes in the second quarter for his company. 
NETA, which has been touted as the most far-reaching reform of an electricity 
market in the world, went into effect last Tuesday. The system replaces the 
previous wholesale power market with a physically settled, bilateral, 
day-ahead market that is paired with a continuously traded balancing market.
However, in the first quarter, the flow of transactions in the U.K. was hurt 
as companies operating there focused on integrating new computer systems 
associated with the new standard. 
Now that the system has been implemented, Sheriff told Dow Jones Newswires 
that he expects to see a pickup in the flow of transactions. 
Sheriff couldn't put a dollar figure on his estimate. He also didn't know 
whether the total volume of transactions had risen or declined from the 
fourth quarter. 
NETA is aimed at creating liquidity to reduce the cost of wholesale power. 
An increase in the cost of fuel in the region may place companies that 
haven't hedged fuel costs in difficult positions, Sheriff said, explaining 
that power prices have fallen, while the cost of fuels used to generate power 
has risen. 
Enron Europe, a unit of Houston-based Enron Corp. (ENE), is among the largest 
buyers and sellers of gas and power in Europe. 
In 2000, wholesale natural-gas trading volumes in Europe and other regions 
outside North America rose 131% to 3.6 trillion British thermal units per day 
from 1999, while power trading volumes jumped 372% to 55 million megawatt 
hours. 
-By Christina Cheddar, Dow Jones Newswires; 201-938-5166; 
christina.cheddar@dowjones.com

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



CANADA: Enron calls on Ontario to open power market quickly.
By Scott Anderson

04/04/2001
Reuters English News Service
(C) Reuters Limited 2001.

TORONTO, April 4 (Reuters) - Enron Corp. , North America's biggest buyer and 
seller of natural gas and electricity, put pressure on the Ontario government 
on Wednesday to deregulate the provincial energy market, Canada's biggest, as 
quickly as possible. 
Ontario has already pushed back its previous deadline of November 2000 by one 
year to sort out its deregulation problems and avoid the problems encountered 
by California in energy deregulation.
The delays have frustrated potential corporate players. 
"We think the right thing for Ontario is to move ahead with this plan, open 
the markets and get them working," Kenneth Lay, Enron's chairman, said at a 
breakfast speech at the Toronto Board of Trade. 
"Let people start building the new power plants and, of course, providing a 
lot of the types of services we provide elsewhere." 
Lay warned that the longer the government drags its feet on the issue, the 
more it places itself at risk of scaring off potential investors. 
"The delays continue to create uncertainty and uncertainty tends to 
discourage investment," Lay told reporters. "By discouraging investment, as 
the market keeps growing, it could be that Ontario is going to have a tough 
time keeping up with the needs of the economy." 
Enron plans to build a $250-million generating plant near the southwestern 
Ontario town of Sarnia, but has delayed the project until Ontario sets a firm 
date for deregulation. 
Lay said Enron is "committed to Ontario" even though other companies have 
said they will move to other jurisdictions if the government does not open up 
the market by the fall. 
He said Ontario is far better prepared for deregulation than was California. 
"I think what California shows is that if you're going to do it, you've got 
to do it right. And California did it wrong," he told reporters. 
"Increasingly politicians are understanding that. You can't deregulate half 
the market, but not the other half. You can't set up a system that does not 
allow price signals to be sent to consumers and even after prices go up, you 
can't just keep shielding consumers from price signals and get no response." 
Power demand from California's industries and 32 million residents has 
increased dramatically, but the state has not seen any new generating 
capacity added in about 10 years. 
The crisis there has been blamed on California's own 1996 power deregulation 
law, which required utilities to buy energy on the spot market, where prices 
have skyrocketed, but maintained caps on the rates they could charge 
consumers. 
The problem was then compounded by California's own surging demand, resulting 
in the rolling blackouts and voluntary power cutbacks of the past months.

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


BG Group:UK Court Rules In Favor Of Co Against Enron Unit

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

LONDON -(Dow Jones)- BG Group PLC (BRG) said the U.K.'s House of Lords 
Wednesday found in favor of its 51.18% owned Central Area Transmission System 
(CATS) in a dispute with Teeside Gas Transportation Ltd. 
The latest ruling overturns a Court of Appeal decision made in 1999 which 
found in favor of Teeside Gas, a unit of Enron Corp (ENE).
The dispute between BG and Teeside Transportation involved a 25-year 
capacity, transportation and reservation agreement signed in 1990. A BG 
spokeswoman told Dow Jones Newswires Wednesday that Teeside ended its 
payments connected to the agreement in February 1995. 
The CATS pipeline and terminal system began transporting gas from the North 
Sea fields of Everest and Lomond in 1993. It currently handles around 1.7 
billion cubic feet a day of natural gas, which represents about 20% of U.K. 
gas production, the spokeswoman said. 
BG Group said Teeside is now required to repay CATS the money gained 
following the 1999 ruling, plus interest. It said its share of the payment 
will amount to about GBP34 million, plus interest of approximately GBP17 
million. 
The other shareholders in CATS are BP Amoco PLC (BP), Amerada Hess Corp. 
(AHC), Phillips Petroleum Co. (P), Totalfina Elf (TOT) and Agip SPA (I.AGI). 
-By Sarah Turner, Dow Jones Newswires; 44-20-7842-9299; 
sarah.turner@dowjones.com -0- 04/04/01 15-16G

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


GERMANY: Enron starts online quotes for German gas market.

04/04/2001
Reuters English News Service
(C) Reuters Limited 2001.

FRANKFURT, April 4 (Reuters) - Enron Energie GmbH, the German divison of the 
U.S. energy giant , has started quoting German gas prices on its website, it 
said on Wednesday. 
"We have launched spot gas quotes for the domestic delivery point at 
Lampertheim," managing director Andreas Radmacher told Reuters in an 
interview.
"This is a good point to choose to generate liquidity and to create a 
wholesale market inside Germany, because there is a range of suppliers." 
"We hope that other traders will also get involved." 
Enron on its trading platform enrononline.com currently quotes gas offers and 
bids for the day ahead, the weekend and the week ahead in parcels of 20 
megawatt hours in euros. 
Lampertheim lies near Heidelberg in south-west Germany on the border of the 
Hesse and Baden-Wuerttemberg states. So far, the market had been restricted 
to border quotes in a market controlled by five incumbents involved in 
importing gas, which account for 80 percent of total requirements. 
Gas trading inside the country is only just beginning to start, because 
distributors and customers have taken years to agree on voluntary terms for 
network access and transport. 
Radmacher said it was difficult to start a reliable gas business because 
current transmission and supply agreements were still not clearly defined or 
binding. 
Supply contracts had not been standardised and shippers had to negotiate with 
three or four pipeline owners per deal. 
But new suppliers were ready to overcome the bureaucracy.

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


BG to get back 51 mln stg as House of Lords finds against Enron's Teesside Gas

04/04/2001
AFX News
(c) 2001 by AFP-Extel News Ltd

LONDON (AFX) - BG Group plc said it will receive some 34 mln stg and 17 mln 
interest from Enron Corp unit Teesside Gas Transportation Ltd (TGTL), after 
the House of Lords overturned a Court of Appeal decision on TGTL's dispute 
with BG's 51.18 pct-owned Central Area Transmission System (CATS). 
The other owners of the CATS pipeline and terminal system are BP Amoco PLC, 
the operator, with 29.53 pct; Amerada Hess Corp with 17.72 pct; Phillips 
Petroleum Co with 0.66 pct; TotalFinaElf with 0.57 pct; and ENI Spa unit Agip 
with 0.34 pct.
The Court of Appeal decision in favour of TGTL was made in July 1999. 
CATS began transporting gas from the Everest and Lomond fields in the Central 
North Sea in 1993. It currently handles around 1.7 bln cubic feet per day of 
natural gas. 
The dispute involvedthe Capacity Reservation and Transportation Agreement 
(CRTA) signed in 1990 between CATS' owners and TGTL for the provision of a 
25-year transportation service. Under the terms of that agreement, TGTL would 
pay for 300 mmscf/d of reserved capacity, whether or not it was used. 
The CATS pipeline was completed in March 1993 and TGTL began making payments 
the next month, even though it had no contracted field ready to use its 
capacity at that time. In Feb 1995, it stopped payments and reclaimed its 
previous payments, after which CATS' owners issued proceedings against TGTL 
for the outstanding monies. 
jsa For more information and to contact AFX: www.afxnews.com and 
www.afxpress.com

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



Utilities' merger faces challenge 
PGE's dance card may take awhile to fill if its deal with Sierra Pacific 
fails 
Wednesday, April 4, 2001
By Gail Kinsey Hill of The Oregonian staff 
If Sierra Pacific Resources leaves Portland General Electric at the altar, 
other suitors may cool their heels awhile before proposing. 
Not only has the West's energy crisis apparently spoiled the pending marriage 
of Nevada's Sierra Pacific and PGE, it has chilled a consolidation trend that 
just a year ago was as hot as a starlet's love life . 
"I don't see any eager buyers out there," said Justin McCann, a senior 
analyst with Standard & Poor's. "Things are pretty rocky at the moment." 
Still, possibilities exist. Analysts suggest that Northwest Natural Gas in 
Portland, Puget Energy in Bellevue, Wash., and IdaCorp in Boise could be 
interested in going after PGE if Sierra Pacific and Enron Corp., PGE's parent 
company, part ways. 
On May 5, either Enron or Sierra Pacific can walk away from the transaction 
if closing documents aren't signed by then. 
Officials from both companies have said they remain committed to the deal, 
but they admit that changing regulatory and financial conditions make closure 
unlikely. 
Houston-based Enron said it's prepared to wait patiently for another offer. 
"This is not a fire sale," said Mark Palmer, an Enron spokesman. 
Enron, an energy and trading company, bought PGE in 1997, eager to benefit 
from markets that were being opened to greater competition and less 
government regulation. But officials grew impatient with the plodding pace of 
deregulation and decided to jettison such capital-intensive, slow-growing 
assets as PGE. 
In November 1999, Sierra Pacific Resources announced plans to buy PGE for 
$3.1 billion in cash and assumed debt, an amount similar to what Enron paid 
two years earlier. 
After more than a year of leaping regulatory hurdles, the deal appeared close 
to completion. Then last summer, energy shortages and sky-high wholesale 
electricity prices swept through California and the rest of the West. 
Wholesale prices, 10 times year-ago levels, have gouged Sierra Pacific's 
bottom line. The company owns generating plants that supply electricity for 
some business and residential customers, but it also buys on the wholesale 
market. 
Sierra Pacific had intended to become increasingly reliant on the wholesale 
market and to sell many of its generating facilities. The utility was to use 
proceeds from the sales to buy down its debt and secure financing for the PGE 
purchase. 
But the Nevada Legislature is close to slapping a moratorium on the sales of 
any generating plants. Lawmakers worry that divestitures could pinch energy 
supplies still further and roil wholesale markets for months to come. 
Sierra Pacific's weakened financial state also means that the federal 
Securities and Exchange Commission likely won't approve the merger. The SEC 
is the remaining regulatory body that must sanction the deal. 
PGE isn't in on the negotiations, but officials agree that the sale looks 
shaky. 
"It's anyone's guess right now," Peggy Fowler, PGE president and chief 
executive officer, recently told The Oregonian's editorial board. 
So far, talk about replacement bidders is more speculation than fact. 
Analysts said a utility based in the West is the most likely scenario. 
"It's probably going to be somebody close by," said Doug May, a senior 
portfolio manager with Wells Fargo Private Asset Management in Grand 
Junction, Colo. "It's tough to come in from another part of the country." 
But don't rule out foreign companies, May added. When ScottishPower bought 
Portland-based PacifiCorp in December 1999, it became the first foreign 
concern to buy a U.S. electric utility. The merger stirred up talk of more 
international linkups. 
Regionally, Northwest Natural's name comes up as a potential suitor. 
The Portland-based utility already works cooperatively with PGE in a number 
of business arrangements, including a joint meter-reading program. 
"A lot of programs we're doing are the kinds of things other electric and gas 
utilities are doing under one utility," said Mark Dodson, Northwest Natural 
vice president of public affairs and general counsel. "I'm not at all 
surprised people might speculate that we would acquire" PGE. 
Dodson declined to comment directly on whether Northwest Natural might try to 
buy PGE. 
"As long as there's an agreement in place, it's inappropriate for us to talk 
about it," he said. 
Officials of IdaCorp, a holding company whose primary subsidiary is electric 
utility Idaho Power, also declined to discuss whether they have been eyeing 
PGE. 
"We can't really comment on deals we might get into," said Russ Jones, an 
IdaCorp spokesman. 
IdaCorp made an unsuccessful bid for PGE two years ago when Enron first 
solicited offers, Jones said. But, he said, "I don't know the answer to 
whether we'd be interested now. 
"If it becomes available," Jones added, "we'll probably investigate, as we 
would with any other assets that might become available." 
Puget Energy, a holding company for Puget Sound Energy, also declined to 
comment. 
"We never speculate on rumors," said Grant Ringel, Puget Energy's director of 
corporate communications. 
Puget Sound Energy serves electric and natural gas customers in Western 
Washington and is the result of the 1997 merger of Puget Sound Power and 
Light with Washington Energy, the parent of Washington Natural Gas. 
The merged utilities, serving about 1.4 million customers, formed the largest 
electric and natural gas utility in the Northwest. 
In the 1990s, as federal laws began deregulating electric power markets, 
utility mergers became increasingly common. Industry executives and analysts 
attributed the trend to increased competition and a drive toward greater 
efficiency. 
"With deregulation, economies of scale are very important," said Wells 
Fargo's May. "It's very difficult to do well as a small company. 
The trend has taken in couplings of electric utilities and natural gas 
utilities -- "convergence" in industry parlance -- as well as linkups of 
electric utilities. 
Yet, analysts note that the industry's consolidation has slowed of late. The 
uncertain regulatory environment throughout the United States, the energy 
shortage in the West and the electricity crisis in California are putting the 
brakes on the trend, they say. 
"This whole California thing has made everyone very cautious," said Standard 
& Poor's McCann. "People want to see the situation sort itself out." 
You can reach Gail Kinsey Hill by e-mail at gailhill@news.oregonian.com or by 
telephone at 503-221-8590. 



Wholesale market bright for PGE 
The utility reports $1.17 billion in revenue in fiscal 2000 from reselling 
electricity 
Wednesday, April 4, 2001
By Gail Kinsey Hill of The Oregonian staff 
Enron Corp. views Portland General Electric as a sluggish asset, weighted 
down by regulatory laws and political uncertainties. 
Maybe so. But PGE posted healthy financial gains in fiscal 2000, benefiting 
from the region's energy shortage and spiking wholesale electricity prices. 
Revenue from wholesale power sales jumped to a record $1.17 billion last 
year, more than triple the 1999 wholesale sales figure of $355 million. 
Bottom line: PGE recorded earnings of $139 million in 2000, up 10 percent 
from 1999 earnings of $126 million. 
"It was a banner year for us," said Jim Piro, PGE's chief financial officer. 
The utility's financial strength should continue, even if a pending sale to 
Sierra Pacific Resources falters, according to analysts. 
"I don't think PGE will be tainted as an asset" if the utility again is put 
on the block, said Doug May, senior portfolio manager for Wells Fargo Private 
Asset Management in Grand Junction, Colo. 
In contrast with PGE, Sierra Pacific suffered from high wholesale power 
prices, reporting losses of $39.78 million in 2000, a sharp decline from 1999 
earnings of $51.75 million. 
Utility-owned hydroelectric and coal- and gas-fired generation plants supply 
about half of the electricity that's needed to serve PGE's 725,000 business 
and residential customers. The company buys the rest of its power on the 
wholesale market. 
Until last summer, wholesale prices remained relatively stable. Then, pushed 
by electricity shortages and California's botched deregulation plan, prices 
soared: from between $20 and $30 a megawatt hour to more than $200 a megawatt 
hour. The market became so volatile that on some days short-term, or "spot" 
prices, spiked above $600 a megawatt hour. 
Soaring prices cut into the financial reserves of utilities caught short of 
power and forced to the market for last-minute buys. But PGE, with 
experienced wholesale traders and a conservative purchasing strategy, had 
secured long-term contracts as a hedge against the market. The approach kept 
spot purchases to a minimum. 
In fact, PGE bought more electricity than its customers could use. The "long" 
position allowed PGE to resell the electricity -- California was among its 
customers -- for a tidy profit. 
"We were fortunate to be in a good situation last year," Piro said. 
Wholesale electricity sales accounted for 52 percent of PGE's operating 
revenue last year, a turnaround from prior years when retail sales dominated 
financial returns. 
Wholesale sales proved so lucrative that PGE withdrew a request to raise 
rates by 16.5 percent. The utility may raise rates late this year, officials 
said, or if cash continues to pour in, it may issue refunds to customers. 
PGE's expenses also have gone up dramatically. The utility spent $1.5 billion 
on electric power and fuel purchases last year, up from $654 million in 1999.