---------------------- Forwarded by Mary Hain/HOU/ECT on 10/02/2000 08:43 AM 
---------------------------
   
	Enron Capital & Trade Resources Corp.
	
	From:  "Ronald Carroll" <rcarroll@bracepatt.com>                           
10/02/2000 06:48 AM
	

To: <jhartso@enron.com>, <mary.hain@enron.com>, <smara@enron.com>, 
<snovose@enron.com>
cc:  
Subject: THE WINNERS IN CALIFORNIA


 DJ POWER POINTS: Winners In $4 Billion Calif Sweepstakes
>   By Mark Golden
>   A Dow Jones Newswires Column
>
>   NEW YORK (Dow Jones)--Now that PG&E Corp (PCG), Edison International
> (EIX)
> and
> Sempra Energy (SRE) have announced that about $4 billion in power costs
> flew
> out
> their windows this summer, Wall Street might be curious to know on which
> corporate doorsteps the windfall landed.
>   A few of the beneficiaries have indicated publicly how well they did
> this
> summer. We've supplemented those announcements with data on market share,
> conversations with western U.S. electricity traders, second quarter
> earnings
> reports and publicly available information from the California Independent
> System Operator - operator of the state's high-voltage transmission grid
> and
> real-time power market - to create this Top 10 list of winners in the
> Summer
> of
> Luck.
>
>   No. 10: Duke Energy Corp (DUK), Calpine Corp (CPN) and AES Corp (AES).
> These
> companies, with significant merchant power plants in California, didn't
> make
> as
> much money as they could have because they sold their power before prices
> started rising.
>   AES, for starters, has sold the vast majority of the capacity of its
> California natural-gas fired generators under a long-term, fixed-price
> contract
> to make power for another company - a company much higher on this list -
> which
> supplies the natural gas and owns the electricity.
>   Duke, with 2,680 megawatts of generators in California, lost out on
> significant potential income, because it sold most of its power months
> before
> prices started to rise.
>
>   No. 9: Electricity trading companies. These companies, like Utilicorp
> United's
> (UCU) Aquila, Citizens Power (now owned by Edison International) and
> Belgian
> company Tractebel's (B.TRB) U.S. unit, mostly traded in and out of
> positions
> -
> and they made good profits doing so. This group also includes the
> unregulated
> trading units of Sempra and PG&E.
>
>   No. 8: Western utilities with power to spare, namely Arizona Public
> Service
> Co., the Public Service Co. of New Mexico (PNM) and IdaCorp Inc.'s (IDA)
> Idaho
> Power.
>   PNM said on Sept. 14 that it made $193 million in wholesale marketing
> during
> July and August, a 90% increase over the same two months last year.
> Arizona
> Public Service, which is a subsidiary of Pinnacle West Capital Corp (PNW),
> had
> considerably more power to sell than PNM, market sources said.
>
>   No. 7: TransAlta (T.TA) and PPL Global (PPL). Western electricity prices
> have
> been high outside California as well. TransAlta and PPL reached deals to
> buy
> two
> major coal-fired power plants in the Northwest last year and took
> ownership
> before this summer. Unlike gas, coal is still cheap.
>
>   No. 6: Enron Corp (ENE), El Paso Energy (EPG) and the energy trading
> unit
> of
> Morgan Stanley-Dean Witter (MWD). Unlike the in-and-out traders, these
> companies
> bet on rising prices and came into the summer holding large supplies in
> the
> West, electricity traders said.
>   "Enron just bought and bought and bought before the summer, and never
> seemed
> to sell," said one trader.
>   El Paso also owns 896 MW of generation in California.
>
>   No. 5: The U.S. Federal Government and the State of Arizona. Federal
> utility
> Bonneville Power Administration and Arizona public utility Salt River
> Project
> rode to California's rescue on the hottest days this summer, providing
> hundreds
> of megawatts of supply at top dollar.
>
>   No. 4: California's independent generators. The merchant power companies
> in
> California that did the best this summer are Reliant Energy Inc. (REI),
> with
> about 4,063 MW of California capacity; Southern Co. (SO), with about 3,000
> MW;
> NRG Energy (NRG), with 1,500 MW; and Dynegy Inc. (DYN), with 1,250 MW.
>   Unlike Duke, AES and Calpine, these companies held on to most of their
> power
> and sold it in the day-ahead and real-time markets, where prices turned
> out
> to
> be best.
>   Reliant has already indicated that third quarter earnings available for
> equity
> will top last year's figure by about $110 million.
>   All of these companies, however, saw their windfall trimmed by
> diversification. Each owns gas-fired and some oil-fired merchant power
> plants in
> the eastern U.S., where high fuel prices and low electricity prices have
> damped
> profits.
>   "We've had a good summer, but we have a pretty balanced portfolio across
> the
> country," Stephen Bergstrom, president and chief executive of Dynegy, said
> in an
> interview. "As good as the summer has been in the West, it's been as bad
> in
> the
> eastern half of the country."
>
>   No. 3: Los Angeles Dept. of Water & Power (and its bondholders). LADWP
> has
> about 7,000 MW of generation, or about 2,000 MW more than it needs for its
> customers. As LADWP general manager S. David Freeman said a few weeks ago,
> "A
> blind pig could make money with that setup."
>
>   No. 2: The heavily taxed citizens of British Columbia, Canada. Their
> provincially owned utility, BC Hydro, has been very busy this summer
> turning
> (free!) water into electricity worth hundreds of millions of dollars more
> than
> expected and flooding the province's general funds. With hydroelectric dam
> reservoirs the size of New England and transmission lines that can carry
> 3,000
> MW of southbound power, BC Hydro has single-handedly kept socialism
> solvent
> for
> another year in British Columbia.
>
>   And the Grand Prize winner in the California Utilities  Sweepstakes:
> Williams
> Companies (WMB), the company AES's generators are working for. Williams
> controls
> almost 4,000 MW of gas-fired generation in the San Diego area, a little
> more
> than 10% of what California's utilities need on average during daylight
> hours in
> the summer.
>   What's more, those plants are under contract as "resource must run" with
> the
> ISO. Their power can't be sold in the forward market. Williams had to take
> daily
> and real-time market prices by default, which is exactly what you would
> have
> done to maximize profits.
>   And Williams isn't hurt by the factors that have diluted other
> companies'
> California gains. It isn't very exposed in the East; and as a big producer
> of
> natural gas, it's benefiting from high gas prices nationwide.
>   Just to give an idea of how well the company likely has done this
> summer,
> consider that Williams' second quarter profit from its energy services
> segment
> rose to $412 million this year from $106 million in the second quarter of
> 1999.
> That in a quarter with one and a half months of soaring prices. In the
> third
> quarter, there were three.
>   -By Mark Golden, Dow Jones Newswires; 201-938-4604;
> mark.golden@dowjones.com
>
>   (END) Dow Jones Newswires  29-09-00
>   1800GMT(AP-DJ-09-29-00 1800GMT)
>