In Energy Shortages, New Demand for Enron
The New York Times, 04/01/01

PULL THE PLUG / Not enough sunshine on politics of water board
Houston Chronicle, 04/01/01

USA: Exxon Mobil tops Fortune 500 list, replacing GM.
Reuters English News Service, 04/01/01

Exxon Mobil Tops 2001 Ranking of the Fortune 500; Oil giant replaces GM at 
top of list after 15 years; Mega-Retailer Wal-Mart is No. 2
Business Wire, 04/01/01

Exxon Mobil Tops Fortune 500 List Amid Record Revenue; GM Drops to Third
Dow Jones Business News, 04/01/01

Exxon Mobil Replaces General Motors Atop Fortune 500 (Update1)
Bloomberg, 04/01/01

India: Maharashtra panel on SEB to submit report on April 10
Business Line (The Hindu), 04/01/01

The Winter of Our Disconnect ENERGY AND THE MAKING OF MODERN CALIFORNIA; By 
James C. Williams; University of Akron Press: 465 pp., $49.95, $24.95 paper 
THE NATURAL GAS MARKET Sixty Years of Regulation and Deregulation; By Paul W. 
MacAvoy; Yale University Press: 140 pp., $35
Los Angeles Times, 04/01/01

India: CM objects to 'dumping' of IAS officers
The Hindu, 03/31/01

BROADBAND SERVICES: MILES TO GO
Computers Today, 03/31/01


Money and Business/Financial Desk; Section 3
In Energy Shortages, New Demand for Enron
By ELIZABETH R. SMITH

04/01/2001
The New York Times
Page 13, Column 1
c. 2001 New York Times Company

CALIFORNIA'S rolling blackouts and a looming energy crisis in other parts of 
the country are stoking investor interest in companies positioned to reap 
benefits from the power shortages. 
Many investors, stunned by the market's precipitous fall, see energy as one 
of the few sectors with a promising profit outlook.
And in that so-called energy merchant sector, the Enron Corporation stands 
out as the industry leader. Based in Houston, it buys and sells wholesale 
electricity, natural gas and scores of other commodities, including broadband 
capacity for data-delivery services. In the fourth quarter of 2000, Enron's 
revenue more than tripled, to $40.75 billion, from the period a year earlier. 
That mushrooming revenue can be traced to the unprecedented surge in the 
price of electricity and natural gas, particularly in California. On Tuesday, 
California power regulators approved a 46 percent increase in electricity 
rates, the largest in the state's history. Electricity shortfalls have also 
been predicted for New York City this summer. 
Despite its red-hot market, Enron is no bargain. Its share price surged 87 
percent in 2000, to end the year at $83.125, up from $44.375 a year earlier. 
It hit a 12-month, intraday high of $90.75 on Aug. 23, around the time that 
California's utilities first sounded the alarm. And even though Enron has 
taken some hits this year, the stock closed at $58.10 on Friday, 39.5 times 
its 2001 earnings per share, well above its peers. On March 22, it fell to a 
12-month low of $51.51 amid concerns about possible layoffs in its broadband 
operations, but rebounded after Jeffrey K. Skilling, the chief executive, 
assured investors that all was well in broadband. 
Enron's edge is its sheer size and its recognized competence in helping 
corporate clients cope with unprecedented swings in electricity prices. Enron
, in turn, charges a premium to manage the risk of energy price movements, 
said Donato J. Eassey, a natural-gas analyst at Merrill Lynch. ''They have 
market intelligence that is second to none,'' he said. ''They help firms 
lower the cost by avoiding the spot market for power.'' 
The value of Enron's broadband effort and its core wholesale energy 
operations have yet to be fully reflected in its stock price, he added, 
predicting that shares will climb to $99.20 in 12 months. 
Raymond C. Niles, an analyst at Salomon Smith Barney, also likes Enron 
because of its dominance. The company has unit operating margins that are two 
to three times that of its closest competitor, Dynegy, in wholesale energy, 
he said: ''When the heat is on literally, people need a company like Enron 
for physical delivery because it has so many ways to get them that 
resource.'' He predicted that the stock would rise to $100 within 12 months. 
Neither analyst is worried about developments in India, where Enron was 
forced to invoke government guarantees to recoup payment for power generated 
at its Dabhol power plant in the state of Maharashtra. 
OTHER experts favor Enron because it is not just a pure power play. The 
company, which is shedding many of its hard assets, has bet heavily on its 
prospects for buying and selling broadband capacity. Skeptics say the demand 
for broadband is nowhere near as immediate as the need for energy, but Amy M. 
Jaffe, a senior energy adviser at the James A. Baker III Institute for Public 
Policy at Rice University in Houston, said Enron was smart to move into 
broadband. 
''They might be in broadband too early, but that's O.K., she said, ''There 
will be demand for it.'' 
Enron's expansion into data delivery, as well as its market-making of energy 
commodities, help distinguish it from classic energy businesses like oil 
companies, she said. 
Lawrence R. Fuller, a senior portfolio manager at the Merrill Lynch 
Fundamental Growth fund, says Enron is his largest energy holding. 
''The company is controversial because its valuation is very high,'' Mr. 
Fuller said. ''But they have a tremendous lead over their rivals and a 
mastery of their business. You have tremendous economies of scale here that 
drive their profit.''

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



OUTLOOK
Editorials
PULL THE PLUG / Not enough sunshine on politics of water board
Staff

04/01/2001
Houston Chronicle
4 STAR
2
(Copyright 2001)

The time has come to pull the plug on the Houston Area Water Corp., the 
citizen board called "the Hawk" that is in the process of recommending a 
company to design, build and operate a water plant at Lake Houston. 
The members of the Hawk board appear to have done their job thoroughly and 
conscientiously. The board's chairman, attorney David Berg, has been 
commendably outspoken about his concerns for the bidding process and the 
wherewithal of Azurix Corp., a troubled affiliate of energy giant Enron Corp. 
and one of three companies in the final running for the contract.
However, the political maneuverings and pressures being placed behind the 
scenes on both city staff evaluating the bid proposals and the Hawk board 
bear much more scrutiny than can be gained in the format of this 
quasi-private corporation. 
City Attorney Anthony Hall, reported the Chronicle's Mary Flood, started an 
hourlong, heated argument with Berg at a March 21 mayoral fund-raiser over 
the possibility that Azurix, rumored as the favorite of Mayor Lee Brown's 
administration, might not win the bid. 
Sources familiar with the argument told Flood that Hall threatened Berg that 
he would dismantle the Hawk if the process that kept Azurix as the winning 
recommendation was not followed. Hall denied he said anything like that, 
saying his complaints were about procedures. Berg would not comment 
specifically on that matter. 
Hall, according to Flood's report, said he told Berg that because the 
companies had relied on a long-established formula for choosing the 
front-runner, it would invite trouble to change or ignore the formula now. 
But the companies said they were never told about the formula and have had 
nothing specific to rely on about how the staff or the Hawk board would make 
its decision. 
The pressure brought to bear on the Hawk, in such an unsavory way and without 
public controls, is extremely troubling. These boards clearly were never 
intended to handle projects so politically divisive, with so much money at 
stake. 
The water plant contract under bid is worth $150 million. The water project 
it is part of could reach $2 billion. 
State Rep. Garnet Coleman, D-Houston, who wrote the statute allowing local 
government corporations such as Hawk, said he never intended these citizen 
boards to handle projects as large as the water plant. 
Politicians who want to guide this process ought to be willing to do it 
openly and face both the public scrutiny and the consequences of their 
actions. 
For that reason - not because the bid award may not go the way the city 
administration wants it to - the Hawk corporation should be dissolved.

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




USA: Exxon Mobil tops Fortune 500 list, replacing GM.

04/01/2001
Reuters English News Service
(C) Reuters Limited 2001.

NEW YORK, April 1 (Reuters) - Exxon Mobil Corp. , aided by higher oil prices, 
ousted automaker General Motors Corp. from the No. 1 ranking in the Fortune 
500 list of the largest American companies, the business magazine said on 
Sunday. 
"The country faced an energy crunch as the drain on resources from several 
years of economic expansion collided with utility deregulation, soaring 
natural gas prices, and OPEC's maneuvering to keep oil prices high," Lee 
Clifford, a writer for the Magazine, said the article about the reasons 
behind Exxon's gain from the No. 3 spot in 1999.
With revenues for 2000 at a record $210 billion, Exxon, the most profitable 
company with $17.7 billion in net income in 2000, outpaced No. 2 Wal-Mart by 
$17 billion and No. 3 GM by $26 billion. 
On the flip side of the surge for energy companies, high oil prices increased 
the cost of doing business for most companies, and had a big impact on 
corporate profits last year. 
Five out of the top 15 companies made less money than they did in 1999. 
Profits rose overall by 8.4 percent, down significantly from the prior year's 
28.7 percent growth. 
Rounding out the top ten of the Fortune 500 in order behind Exxon Mobil, 
Wal-Mart and GM: Ford Motor Co. ($180.6 billion in 2000 revenues); General 
Electric Co. ($129.9 billion); Citigroup ($111.8 billion); Enron Corp. 
($100.8 billion); International Business Machines Corp. ($88.4 billion); AT&T 
Corp. ($66.0 million); and Verizon Communications ($64.7 billion).

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


Exxon Mobil Tops 2001 Ranking of the Fortune 500; Oil giant replaces GM at 
top of list after 15 years; Mega-Retailer Wal-Mart is No. 2

04/01/2001
Business Wire
(Copyright (c) 2001, Business Wire)

NEW YORK--(BUSINESS WIRE)--April 1, 2001--Exxon Mobil vaulted into the top 
spot on the annual FORTUNE 500 ranking of the largest American companies, 
replacing 15-year veteran GM. 
With revenues for 2000 at a record $210 billion, Exxon outpaced No. 2 
Wal-Mart by $17 billion and No. 3 GM by $26 billion. The FORTUNE 500 ranking 
has been dominated by two industries -- cars and oil -- since its inception 
in 1955: in 47 years, only two companies have been at the top of the list, 
Exxon (which merged with Mobil in 1999) and GM. The 2001 FORTUNE 500 list and 
related stories are available at www.fortune.com beginning at 6:00 p.m. ET 
Sunday, April 1.
Exxon Mobil wasn't the only oil company to jump in the rankings. "The country 
faced an energy crunch as the drain on resources from several years of 
economic expansion collided with utility deregulation, soaring natural gas 
prices, and OPEC's maneuvering to keep oil prices high," FORTUNE's Lee 
Clifford writes in the introduction to the list. Those high prices helped 
other energy companies strike it rich: Duke Energy (No. 17) and Reliant 
Energy (No. 55) nearly doubled their revenues to catapult up the list, as did 
diversified energy companies like Enron (No. 7) and Dynegy (No. 54). "Of 
course, should energy prices fall, these companies will have a tough time 
hanging onto their new spots on the FORTUNE 500," Clifford says. 
On the flip side of the surge for energy companies, high oil prices increased 
the cost of doing business for most companies, and had a big impact on 
corporate profits last year. Five out of the top 15 companies made less money 
than they did in 1999. Profits rose overall by 8.4%, down significantly from 
last year's 28.7% growth. Together, the FORTUNE 500 generated $7.2 trillion 
in sales (up more than 13% from last year), made $444 billion in profits, and 
employed 24 million people. No. 1 Exxon Mobil was the most profitable 
company, with profits rising 124% to $17.7 billion. 
No. 2 Wal-Mart, with revenues of $193 billion, is the largest employer in the 
FORTUNE 500, with 1.2 million employees (about the same as the population of 
Idaho). Geographically, California and New York top the state list with 55 
company headquarters each (New York City tops the city list with 40 company 
headquarters). Texas comes in third with 45 companies (including Irving-based 
Exxon Mobil, the No. 1 company; Houston is second on the city list with 20 
companies), Illinois is fourth with 39 and Ohio is fifth with 20 companies on 
the list. 
In related stories on FORTUNE 500 companies, Alex Taylor III looks at Exxon 
Mobil's well-oiled profit-pumping machine. Carol Loomis visits Sandy Weill at 
Citigroup (No. 6) to see how an acquisition addict manages the world's most 
complicated company. Nelson Schwartz reveals how a toothpaste maker, 
Colgate-Palmolive (No. 201), has outperformed Jack Welch's GE (for 17 years). 
Devin Leonard asks who's the boss at Viacom (No. 101). 
The April 16 issue of FORTUNE is available on newsstands beginning April 9. 

For more information, or to schedule an interview with a FORTUNE writer or 
editor, see contacts below. THE TOP 25 OF THE 2001 FORTUNE 500
(Rankings reflect revenues of previous year)

Rank Rank Revenue in % CHANGE
2000 1999 millions FROM 1999
1 3 Exxon Mobil
Irving, T.X. 210,392.0 28.4
2 2 Wal-Mart Stores
Bentonville, Ark. 193,295.0 15.9
3 1 General Motors
Detroit, Mich 184,632.0 4.6
4 4 Ford Motor
Dearborn, Mich. 180,598.0 11.1
5 5 General Electric
Fairfield, Conn. 129,853.0 16.3
6 7 Citigroup
New York 111,826.0 36.4
7 18 Enron
Houston, T.X. 100,789.0 151.3
8 6 Int'l. Business Machines
Armonk, N.Y. 88,396.0 1.0
9 8 AT&T
New York 65,981.0 5.8
10 33 Verizon Communications
New York 64,707.0 95.1
11 9 Philip Morris
New York 63,276.0 2.5
12 31 J.P Morgan Chase
New York 60,065.0 78.2
13 11 Bank of America Corp.
Charlotte, N.C. 57,747.0 12.4
14 12 SBC Communications
San Antonio, T.X. 51,476.0 4.0
15 10 Boeing
Seattle 51,321.0 (11.5)
16 28 Texaco
White Plains, N.Y. 51,130.0 43.3
17 69 Duke Energy
Charlotte, N.C. 49,318.0 126.8
18 14 Kroger
Cincinnati 49,000.4 8.0
19 13 Hewlett-Packard
Palo Alto 48,782.0 -
20 35 Chevron
San Francisco 48,069.0 47.1
21 15 State Farm Insurance Cos.
Bloomington, Il. 47,863.1 7.2
22 17 American International Group
New York 45,972.0 13.1
23 21 Home Depot
Atlanta 45,738.0 19.0
24 30 Morgan Stanley Dean Witter
New York 45,413.0 33.9
25 29 Merrill Lynch
New York 44,872.0 28.7


CONTACT: FORTUNE, New York Susan Brown, 212/522-4071 susan_brown@timeinc.com 
or Caroline Plauche, 212/522-2134 caroline_plauche@timeinc.com or Terry 
McDevitt, 212/522-7149 terry_mcdevitt@timeinc.com 
18:10 EDT APRIL 1, 2001 

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


Exxon Mobil Tops Fortune 500 List Amid Record Revenue; GM Drops to Third

04/01/2001
Dow Jones Business News
(Copyright (c) 2001, Dow Jones & Company, Inc.)

Associated Press 
NEW YORK -- Surging U.S. energy prices gave oil, gasoline and power companies 
new fuel in their climb through the ranks of the annual Fortune 500.
Oil giant Exxon Mobil Corp. (XOM) posted its highest-ever revenue of $210 
billion in 2000, boosting it to No. 1 on the list from its 1999 ranking as 
No. 3. General Motors Co., the world's biggest auto maker, had revenue of 
$184.6 billion and fell to No. 3 from No. 1. 
Other energy companies also fared well in 2000, with Enron Corp. (ENE) rising 
to No. 7 from No. 18. Duke Energy Corp. (DUK) shot up to No. 17 from 69 and 
Reliant Energy Inc. (REI) made it up to No. 55 from 114. 
The list of the largest publicly held companies, ranked by fiscal-year 
revenue, has been compiled annually since 1955 by the editors of Fortune. 
Detroit-based GM, which had held the top spot on the list for 15 years, 
trails No. 2 Wal-Mart Stores Inc. (WMT). 
Energy companies benefited from a surge in revenue brought about by falling 
supplies, utility deregulation, soaring natural-gas prices and OPEC's 
maneuvering to keep oil prices high. In the past year, crude oil has sold for 
as much as $30 a barrel, and gasoline cost more than $2 a gallon last summer 
in some parts of the U.S. 
Other energy firms advancing included Texaco Inc. (TX), which went from No. 
28 to No. 16; Chevron Corp. (CHV), which was ranked No. 20, up from No. 35; 
and Dynegy Inc. (DYN), which rose to No. 54 from No. 112. 
San Francisco-based Chevron agreed to buy Texaco in October for $35.1 billion 
in stock, plus assumed debt of $7.5 billion. The deal is expected to close 
this summer pending review by the U.S. Federal Trade Commission. 
The Internet slowdown and uncertainty about the economy hurt a number of 
companies, particularly telecom firms. AT&T Corp. (T) fell to No. 9 from No. 
8. 
But a merger helped Verizon Communications Inc. (VZ), formed when Bell 
Atlantic and GTE combined in May, leapfrog to the No. 10 spot from No. 33, 
climbing past rivals WorldCom Inc. (WCOM) at No. 32, and SBC Communications 
(SBC) at No. 14. 
America Online Inc., which became the first purely Internet company to break 
into the list last year at No. 337, rose to No. 271. Since then, it has 
become AOL Time Warner Inc. (AOL) with its acquisition of Time Warner. The 
combined company's revenue of $36.2 billion would have made it No. 39 on the 
year 2000 list, but the deal didn't close until early this year. 
Computer companies were led by International Business Machines Corp. (IBM), 
which stayed in the top 10 but fell from sixth last year to No. 8. 
Microsoft Corp. (MSFT) rose to 79 from 84, and Cisco Systems Inc. (CSCO), 
which makes equipment for the Internet, advanced to 107 from 146, despite the 
dot-com crash. 
Wal-Mart, which remained in the No. 2 spot, had revenue of more than $210 
billion. It also has the most employees of any company on the list, with more 
than 1.2 million world-wide. 
The top 10 also included Ford Motor Co. (F), the world's No. 2 auto maker, at 
No. 4, a position it held last year. General Electric Co. (GE) stayed at No. 
5 and Citigroup Inc. (C), the nation's largest financial-services company, 
rose from seventh place to No. 6. 
Total profits for the 500 corporations grew 8.4% for the year, down from 
1999's level of 28.7%, to $444 billion. Revenue grew by more than 13% to a 
combined $7.2 trillion for 2000. They employed more than 24 million workers. 
The top 20: 
1. Exxon Mobil, Irving, Texas, 3, $210.392 billion 
2. Wal-Mart Stores, Bentonville, Ark., 2, $193.295 
3. General Motors, Detroit, 1, $184.632 
4. Ford Motor, Dearborn, Mich., 4, $180.598 
5. General Electric, Fairfield, Conn., 5, $129.853 
6. Citigroup, New York, 7, $111.826 
7. Enron, Houston, 18, $100.789 
8. International Business Machines, Armonk, N.Y., 6, $88.396 
9. AT&T, New York, 8, $65.981 
10. Verizon Communications, New York, 33, $64.707 
11. Philip Morris, New York, 9, $63.276 
12. J.P. Morgan Chase, New York, 31, $60.065 
13. Bank of America, Charlotte, N.C., 11, $57.747 
14. SBC Communications, San Antonio, 12, $51.476 
15. Boeing, Seattle, 10, $51.321 
16. Texaco, White Plains, N.Y., 28, $51.130 
17. Duke Energy, Charlotte, N.C., 69, $49.318 
18. Kroger, Cincinnati, 14, $49.000 
19. Hewlett-Packard, Palo Alto, Calif., 13, $48.782 
20. Chevron, San Francisco, 35, $48.069 
Copyright (c) 2001 Dow Jones & Company, Inc. 
All Rights Reserved

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


Exxon Mobil Replaces General Motors Atop Fortune 500 (Update1)
2001-04-01 21:40 (New York)


     (Adds that citation is from Fortune.com Web site)

     New York, April 1 (Bloomberg) -- Exxon Mobil Corp. topped the
new Fortune 500 ranking of the biggest U.S. companies, replacing
General Motors Corp., as higher oil prices contributed to $210.4
billion in revenue last year.
     GM fell to third, behind Wal-Mart Stores Inc., Fortune said
on its Fortune.com Web site. In the list's 55-year history, only
GM and Exxon have been No. 1. Energy companies fared well this
year, with Enron Corp. moving to No. 7 from 18th and Duke Energy
Corp. going to No. 17 from 69.
     Wal-Mart had $193.3 billion in revenue, about $8.7 billion
more than GM, Fortune said. The retailer employs 1.2 million
people, more than any other company on the list. Ford Motor Co.
was fourth and General Electric Co. fifth.
     Rounding out the top 10 were financial services provider
Citigroup Inc., computer maker International Business Machines
Corp. and telecommunications companies AT&T Corp. and Verizon
Communications Inc.
     The high oil and natural-gas prices that helped energy
companies hurt other industries, Fortune said. Five of the top 15
made less money than in 1999, and profits rose 8.4 percent, less
than previous year's 29 percent increase, Fortune said.
     California and New York led all states among the listed
companies with 55 headquarters each. Texas is home to 45 companies
on the list, while Illinois has 39 and Ohio has 20. Forty of the
companies are based in New York City, twice as many as in Houston,
the No. 2 city.




India: Maharashtra panel on SEB to submit report on April 10

04/01/2001
Business Line (The Hindu)
Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - 
Asia Intelligence Wire

MUMBAI, March 31. THE Godbole Committee, set up to examine the problems faced 
by the Maharashtra State Electricity Board, will submit the first part of its 
report on April 10. The first part, to be completed by April 9, will be 
tabled in the House during the ongoing Assembly session, according to 
sources. 
The committee, headed by the former Chairman of the MSEB, Mr Madhav Godbole, 
was formed last month to examine power purchases from Enron and other 
independent power producers. The six-member committee would suggest 
restructuring measures in part two of its report.
The committee met officials of IDFC and other financial institutions, said a 
senior MSEB official. Enron officials, financial institutions and members of 
the public have made presentations to the committee, apart from the MSEB top 
brass. 
The panel will review the position of overall demand and supply of power to 
industries in Maharashtra with special reference to IPPs and purchase of 
power by MSEB. It would also review the power purchase agreements, already 
signed as well as proposed. 
The committee is to examine the cost of DPC power and its distribution, 
mounting losses of MSEB due to DPC power purchases and other implications. 
- Our Bureau

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


Book Review; Book Review Desk
The Winter of Our Disconnect ENERGY AND THE MAKING OF MODERN CALIFORNIA; By 
James C. Williams; University of Akron Press: 465 pp., $49.95, $24.95 paper 
THE NATURAL GAS MARKET Sixty Years of Regulation and Deregulation; By Paul W. 
MacAvoy; Yale University Press: 140 pp., $35
D.J. WALDIE
D.J. Waldie is the author of "Holy Land: A Suburban Memoir." His forthcoming 
book, in collaboration with photographer Marissa Roth, is "Real City.'

04/01/2001
Los Angeles Times
Home Edition
3
Copyright 2001 / The Times Mirror Company

Could we have foreseen the winter of our disconnect? Could we have predicted 
January's blackouts and this summer's promise of more to come or counted in 
advance the windfall billions collected by Sun Belt power suppliers with 
shiny, abstract names like Enron and Dynegy or the millions more owed them by 
California's near-bankrupt utilities with their plodding 19th-century 
gas-and-electric names? 
The short answer is yes. We should have seen the darkness coming. We saw, 
instead, the brightness of our beliefs about this golden place. We had 
mistaken California for a continent-nearly a universe-from which everything 
we wanted would come endlessly because we expected it to. California at the 
beginning of 2000 was turning raw aspiration into profit as quickly as 
post-Civil War America had and with nearly the same confident mixture of 
technological bravura and financial cunning. In blacked-out, deregulated 
January, after the briefest of gilded ages, we found that California really 
is an island on the land, just as its most perceptive observers had said it 
was, and that California's energy resources are as fragile and limited as any 
island's.
We would have been better served if, in our haste, we had paused to read two 
timely books on the history of power and its regulation. While they do not 
foreshadow California's current electrical mess, they throw some historical 
light on why we're in the dark. 
In "The Natural Gas Market: Sixty Years of Regulation and Deregulation" by 
Paul W. MacAvoy, the problem is the inadequacy of the regulatory models that 
states and federal agencies have applied to natural gas production and 
distribution since the 1930s. None, MacAvoy says, made natural gas plentiful, 
cheap and profitable all at the same time, and no one-producers, pipeline 
operators, retailers or consumers-has benefited from the failed attempts. The 
current natural gas shortage, driving up household bills and the operating 
costs of California's gas-fueled electricity plants, is the result, MacAvoy 
would argue, of regulatory approaches that can't work. 
MacAvoy believes a rational market could be made for natural gas through 
complete deregulation, except for the irrationality of consumers. They don't 
see natural gas as a substance-less commodity, to be priced and delivered by 
the workings of the market forces that interest MacAvoy, a professor at 
Yale's School of Management. Consumers see gas-and electricity-as something 
real, like sunlight or air, that flows predictably from a "second nature" of 
pipelines and transmission towers. The presence in the landscape of these 
grids-like the grids of aqueducts and highways-is so necessary and expected 
that ordinary nature is unimaginable without them. Californians have 
superimposed a man-made "second nature" of energy production and distribution 
on the state's unforgiving landscapes too, but our unique problem is a Gold 
Rush mythology of abundance. Limitless power is part of the myth, beginning 
with the belief in the 1860s and 1870s that California's hills, having 
yielded gold for the taking, would yield coal just as abundantly to power the 
state's transition to an industrial economy. California had plenty of gold, 
it turned out, but almost no coal. 
Nor could the state produce enough firewood where people needed it or 
kerosene to fuel its lamps or manpower to till its fields. Wood, coal, 
kerosene and labor were "power crises" in the 19th century that were 
ultimately resolved by technical innovation, resource substitution and 
historically higher energy costs for California consumers. In the 20th 
century, new believers preached that the Sierra Nevada foothills would flow 
with endless hydropower to keep city lights shining, that more oil fields 
were ready to be discovered to fuel the state's power plants and that nuclear 
technology would make electricity too cheap to meter. It hardly mattered that 
there was no foundation for these beliefs either. 
Our resilient faith in a "second nature" of power that is adequate to the 
myth of California gives James C. Williams' "Energy and the Making of Modern 
California" its poignancy. Williams, whose book was published in hardcover in 
1997, does not forecast the "deregulation crisis" of 2001, but he might have. 
Speaking of Americans generally, Williams says: "They have believed each new 
energy resource to be without fault, to be infinitely abundant, and, 
therefore, to have the potential to effect utopian societal change. Moreover, 
people's faith in an energy resource seems to persist until ... its 
shortcomings are obvious, and only then do they see it cannot bring utopia. 
Yet the failure of a resource to live up to their expectations has not seemed 
to dampen their enthusiasm, as they simply transfer the myth from a fallen 
energy resource to the next resource appropriated for use." In 1996, the 
California Legislature simply substituted a deregulated electricity 
marketplace as the next energy resource expected to work on utopian 
principles. 
Williams ends his account of California's energy history at the hopeful 
moment in the late 1980s when "a diversified, innovative, and less 
centralized energy paradigm" seemed ascendant. Although not as radical as 
environmental purists wanted, he says, California's emphasis on energy 
conservation and alternative power sources-solar, geothermal, wind and 
biomass among them-defined a more benign and flexible "soft energy" path 
paralleling the "hard energy" path of gas-fired steam generators, nuclear 
plants and hydroelectric dams. Between 1973 and 1988, Williams reports, 
California's population grew 37%, and its economy, as measured in goods and 
services, grew 46%, while the state's energy consumption grew only 8%, in 
part because of some of the strictest standards in the world for building 
insulation and appliance efficiency. Jerry Brown, California governor from 
1974 through 1982, was right, after all: Weather-stripping and windmills do 
make a difference. 
Brown's career needs no rehabilitation now, as he begins his campaign for a 
second term as mayor of Oakland, but the debacle of electrical deregulation 
is set to consume other political futures when electricity bills jump 40% in 
May to a projected 100% by the end of summer. Sen. Steve Peace (D-El Cajon) 
and Public Utilities Commission President Loretta Lynch will take the fall; 
Gov. Gray Davis probably will, too. 
The blame for the state's slide into deregulated chaos goes well beyond 
today's cast of bewildered politicians, but Californians are unlikely to 
round up all the suspects-ourselves included-who might be made to answer for 
it. We were too distracted by the collapse of the state's old economy in 
1990, the L.A. riots, earthquakes and other disasters to attend to the tedium 
of energy policy. No one seemed to notice how electricity deregulation, 
launched without much meaningful debate in 1996, recycled the myth of energy 
abundance that Williams lucidly details decade by decade (beginning in 1850), 
or that deregulation required a rapid and sustained increase in generating 
capacity if it was going to deliver the substantially lower electricity costs 
promised for 2001. That was wishful thinking long before the legislature's 
unanimous deregulation vote. 
In 1994, John Bryson, chief executive of Southern California Edison, told the 
California Public Utilities Commission, "Edison does not need any additional 
power until at least 2005." Bryson's declaration that California faced an 
energy glut-not a shortage-was in response to a controversial decision by the 
PUC ordering the state's major utilities to purchase 1,400 megawatts of new 
power annually beginning in 1998. The PUC order was driven by a 1992 
California Energy Commission forecast, fairly accurate it turns out, that 
Californians would need 55,819 megawatts of electricity in 2000. (The actual 
usage was closer to 54,000 megawatts.) 
To foster competitors to the state's largest utilities-Pacific Gas & 
Electric, Edison and San Diego Gas & Electric-the PUC order also required 
them to buy all this new power from independent suppliers, whose presence in 
California's limited energy market would, the PUC believed, not only deliver 
the required megawatts but also gradually cut consumer electric bills. In 
addition, the PUC ordered the three utilities to buy part of this new power 
from suppliers using alternative and renewable energy sources-windmills, 
geothermal and solar -continuing California's successful experiment in a 
parallel industry of "soft energy" supply. 
The utilities resisted. With deregulation the goal of the Clinton 
administration as much as of the power industry, the PUC's order to buy more 
electricity-and expand the small-is-beautiful supply model that Williams 
believed was possible in 1997 when his book was published-looked to the 
utilities like the subsidization of future competitors. In 1995, Edison and 
SDG&E convinced the Federal Energy Regulatory Commission that giving 
environmentally friendly generators preferential treatment was illegal and 
that California, in the midst of a business-crunching recession, didn't need 
more power anyway. Under pressure from the federal commission, the PUC caved 
in. 
And Edison and SDG&E got exactly what they wanted-relief from new 
competition, continued centralization of production within the traditional 
utility grid and a PUC committed to demolishing the state's 80-year-old 
system of utility regulation. The PUC even discouraged the utilities from 
signing long-term supply contracts at current prices, because the PUC 
professed to believe that deregulation would generate lower energy prices 
more quickly than anyone expected. 
To show stockholders that they were no longer the dowdy power companies of 
the old economy, the utilities sweetened short-term profits by refusing to 
invest in plant construction, spun off revenues from their PUC-regulated 
divisions into stock buybacks and worked very hard for full deregulation. 
Their victory a year later was a catastrophe. 
The deregulation consumers got-in the ironic words of State Sen. Jim Brulte 
(R-Rancho Cucamonga), "one of the most far-reaching and forward-thinking 
pieces of legislation" in California history-was peculiarly Californian in 
its degree of institutional amnesia. As political cover for legislators who 
feared prices would immediately climb, the deregulation bill cut electricity 
rates 10% and froze increases until March 2002. That gave residential 
consumers and businesses no reason to switch to alternative power sources or 
conserve more. The bill satisfied the interests of consumer advocates because 
it promised to break the utilities' three-way monopoly on electricity 
production and shrink the power of the PUC (seen as too friendly for too long 
with the power companies it was supposed to regulate). Deregulation, however, 
continued to shield profits at Edison, PG&E and SDG&E by guaranteeing them 
$26 billion in revenue to cover their massive debt for nuclear power plant 
construction. Deregulation also pleased environmentalists because they 
thought it would take the state further down the "soft energy" path. The 
deregulation bill encouraged the utilities to sell off their existing 
fossil-fueled generators, but it failed to offer enough incentives for the 
construction of environmentally friendly ones, despite the 12-year gap since 
the construction of the last major power plant anywhere in California. 
Finally, deregulation created a power market so fragmented that it was 
ludicrously easy to manipulate when the thin surplus of power supply in the 
West began evaporating in the summer of 2000, although the evidence is masked 
by the effects of a drought in the Northwest (which has reduced hydropower) 
and an unlucky combination of plant maintenance, air pollution limits idling 
older plants and higher than expected costs for natural gas. 
The price of bad luck, bad weather and the cunning of power suppliers was 
staggering. At one point in December, electricity that cost $250 a 
megawatt-hour to produce was priced by the power brokers of the California 
Independent System Operator at $1,500 a megawatt-hour. That was the 
negotiated price; the suppliers had asked for $2,000. 
Deregulation had set up a divided marketplace, more irrational than any Paul 
W. MacAvoy picks apart in his analysis of natural gas, in which the 
California Power Exchange was a clearinghouse where buyers and sellers set 
the price of electricity and the California Independent System Operator was 
the "buyer of last resort" if occasional gaps between production and 
distribution unexpectedly failed to meet daily demand. The arrangement began 
unraveling in mid-1998, and the Power Exchange effectively collapsed as soon 
as SDG&E became fully deregulated in July 2000, leaving the poorly trained 
bureaucrats of the Cal-ISO in December and January to struggle to buy 30% of 
the state's daily power needs at arbitrary prices they passed on to utility 
company managers. 
The spectacle of the Cal-ISO gratefully paying a 500% premium over the cost 
of production to keep the lights on last winter was a lesson in "market 
fundamentalism" with a vengeance. Californians, tutored by earnest 
neo-conservatives such as Peace, believed that a deregulated market would 
generate abundant low-cost power simply because that's what a market freed of 
regulation would do, despite the evidence that this particular market was 
based on false assumptions and likely to be manipulated by the energy 
suppliers who designed it. 
In an empty contest of metaphors in 1994 and 1995, the dead hand of state 
regulation had lost to the invisible hand of the marketplace. We'll never 
know if gradual expansion of competition within the framework of regulation 
would have made California's power system more flexible and environmentally 
sustainable and less costly to consumers, as Williams suggested it might. 
'Power tends to corrupt," Lord Acton said. He didn't mean that the powerful 
are necessarily brutal or cruel. He was criticizing the blinding power that 
flows from unexamined convictions, and he was writing about the papacy of 
Pope Pius IX, who forced the doctrine of papal infallibility on the Catholic 
Church. The makers of deregulation-state legislators, consumer advocates, PUC 
commissioners and environmentalists-were convinced that the market they 
constructed was infallible too. That belief led them to pursue their own 
self-interest. 
In the long run, consumers can expect deregulation's perverse effects to 
include significantly higher electricity bills as we pay off $30 billion in 
new debt, diminished local authority over power plant construction and 
further disarray among the small-scale producers of renewable energy. The 
failure of deregulation also will recast the way power is distributed in 
California, as the state hesitantly moves to control part of the electrical 
grid in exchange for bonding the utilities' debt. This first step in creating 
a state power authority is being resisted by power suppliers, who rightly 
fear that public anger over mismanagement of the power system has hardened 
into sympathy for public ownership, as it almost did in the early 1920s. 
In the short run, the failure of deregulation will determine if California's 
hopeful new economy plays out as something more than the latest of the 
state's many booms. There were extractive ones-gold, cattle, wheat, oil, 
suburban house lots and military hardware. And there were booms that wove 
myths-health-seeking in the sunshine, tourism, the movies and all the lost 
dot-coms of last year. Apart from the good and the bad they've done our 
state, our booms have reflected the belief, bordering on religious faith, 
that what is true about California today will be true permanently. 
California's utopian expectations about energy, whose history Williams 
diligently surveys, are central to that myth. It sustained our optimism about 
California's ability to power itself in the past. It's fueling our pessimism 
today, as we lead ourselves deeper into the dark.


PHOTO: 'Nevada Transmission Line Tower at Night," by John Sexton; from 
"Places of Power: The Aesthetics of Technology" by John Sexton with a 
foreword by Walter Cronkite (Ventana Editions: 128 pp., $60); 

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


India: CM objects to 'dumping' of IAS officers
Our Special Correspondent

03/31/2001
The Hindu
Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - 
Asia Intelligence Wire

BANGALORE, MARCH 30. The Chief Minister, Mr. S.M. Krishna, today spoke out 
strongly against the "dumping" of IAS officers on the State and said a stage 
would soon be reached when Karnataka would have to reject such postings. 
He was replying to the discussion on the Budget estimates for 2001-2002 in 
the Legislative Council. The House later passed the Appropriation Bill moved 
by the Chief Minister who also holds the Finance portfolio.
Mr. Krishna, who received a round of applause for his stance against the 
large number of IAS and IPS officers in the State, said the strength of the 
IAS officers was swelling. "It is only Karnataka which is getting a large 
number of officers from the other States while it is not the case in Andhra 
Pradesh and Tamil Nadu." 
The Chief Minister said it was not his desire to question the competence of 
IAS officers from outside the State. "But then I have to be proud of my own 
people. Even the few people who pass the central services examination from 
the State are not posted here. A Karnataka girl who passed the IAS last year 
was posted to the north-east despite her request to be posted in her home 
State." 
Mr. Krishna, reacting to a suggestion by some of the legislators that the 
House adopt a resolution on this matter, said he would rather bring the 
matter to the notice of the Union Home Minister. The Centre should rethink on 
this matter. There was also the need for Karnataka to have a share of the top 
posts at the Central level. "I am only expressing the feelings of the people 
in public administration. The Centre should focus its attention on this 
matter." 
Referring to the power sector reforms and the Union Government selecting the 
State as one of the first beneficiaries, the Chief Minister said the 
transmission and distribution losses in the State were 38 per cent while the 
national average was around 40 per cent. Karnataka could not be an exception 
from what was happening in the other parts of the country although efforts 
were now being made to improve the grid situation and ensure metering of all 
electrical installations, which was the key to checking power theft. 
He said it was a blessing in disguise that the State had dropped the 1,000 MW 
Cogentrix power project in Mangalore. Otherwise the cost of power would have 
been very high, not unlike what Maharashtra was now facing with Enron. The 
construction of the Alamatti power project has been handed over to the 
Karnataka Power Corporation Ltd. since the private sector Chamundi 
corporation had quoted Rs. 1,400 crores for the project while the KPCL had 
quoted Rs. 700 crores. "Our KPCL has a proven track record and the State 
Government decided to go with it."The Chief Minister sounded a note of 
caution to the excise sector and said the Government would come down heavily 
on it if it continued with tax evasion (sale of seconds liquor). The 
Government had set an ambitious target of Rs. 2,086 crores for the coming 
year, in contrast to Rs. 1,500 crores for 2000-2001. The revenue from excise 
had dipped in the mid-Nineties and had registered a 20 per cent increase over 
the past two years. 
Referring to the interim report of the Administrative Reforms Commission 
headed by Mr. Haranahalli Ramaswamy, he said the State had taken a giant step 
forward in pruning the administrative machinery. Around 80 per cent of the 
vacancies which had been frozen over the past decade had now been abolished. 
Mr. Krishna said that the proposal to divert the waters of the west-flowing 
Nethravati was only to provide drinking water to around 72 taluks in the 
plains of the State. Such a diversion of a small quantum of the waters would 
in no way affect the agricultural operations along the natural course of the 
river. The Government would hold discussions with all the political leaders 
before arriving at a decision on the proposal, he said. The Chief Minister 
denied the Opposition charge on the financial position of the State and said 
there was no question of walking into a debt trap. The loans sought were well 
within limits. The budget presented by him was quite transparent and there 
was nothing that he had hidden from the public. The focus of the budget this 
year was on agriculture.

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


COUNTRY BUZZ
BROADBAND SERVICES: MILES TO GO
SUDHIR CHOWDHARY

03/31/2001
Computers Today
76
Copyright 2001 Living Media India Ltd

No incessant dialling and always-on Internet connection sans fat telephone 
bills. The promise was also of enriched and compelling content on the 
desktop, in the living room, and on the field-anytime, anywhere-at a whizzing 
speed. Unfortunately, these prospects don't seem to have fired the 
imagination of home PC users in the country. The response to the first few 
months of broadband connectivity in some affluent localities in Delhi and 
Mumbai have been lukewarm, mainly because of the cost factor. 
To make matters worse for the industry, major players like Spectranet and 
Enron have made their intentions clear to exit from their broadband ventures 
they have set up in Delhi and Maharashtra, respectively. Spectranet promoter 
Atul Punj has decided to withdraw from the fibre optic network business and 
concentrate on the family's core businesses of construction and pipelines. 
Say top sources in the firm, the decision follows from the realisation that 
the "business would be dominated by large groups and multinationals". 
Analysts, too, opine that after a frenzied start, the broadband market will 
settle down with fewer players. Reliance, Bharti Enterprises, BPL, Zee and a 
few others are left in the fray.
Last fortnight, Enron also decided to exit from its broadband ventures in the 
country. Along with MSEB and Global Telesystems, the company had proposed to 
build a high-speed network in India to enable ISPs and corporate houses to 
carry out their business efficiently. It had plans to build a Rs 600 crore 
optical fibre cable network, covering 5,000 kms across Maharashtra. 
Strategies to Cope 
Why has broadband failed to take off in India? Siddhartha Ray, managing 
director, Data Access, an affiliate of Richard Li's Pacific Convergence Corp. 
(PCC) that has launched Network of the World (NOW) in India, quips, "It's 
easy to talk about sexier technologies. But, are there any taker for them as 
well?" According to him, shelling out more than Rs 1,000 per month besides 
coughing up cash for a cable modem is not a sneeze for most of the home PC 
users. Another reason, points out Ray, is that players like Spectranet can't 
be compared to big giants like Reliance who are into a long haul. For 
Spectranet, return on investment is vital and with the business plans already 
going astray, they are desperate to get out of this venture, he points out. 
While both the broadband players in Delhi, Spectranet and Mantra Online, 
admit that there is future potential in the home segment for broadband, their 
current subscription figures point out that the boom among home users for 
broadband services is still a long way off. 
Spectranet currently has around 1,000 subscribers in the home segment, while 
Mantra has to make do with 500 only. As Spectranet managing director Uday 
Punj says, "We are not aggressively marketing the home segment now, as the 
potential in the business segment will any day outflank home demand." Only 
that probably they won't be in the market to see that. 
Spectranet, which was the first off the block in laying optical fibre 
connections in Delhi, formally launched its services in October last year. 
The company has already invested around Rs 160 crore in setting up 600 kms of 
optical fibre in Delhi, Noida, Ghaziabad and Bangalore. 
The other broadband player, Mantra Online, came with its Mantra-via-cable 
offer last August. Mantra's broadband service has till date only covered a 
few affluent colonies in Delhi. 
While one big winner in the Delhi's not-so-hot broadband connections scene 
has been the cable operators, who have provided the crucial last-mile 
connectivity for both Mantra and Spectranet, via their existing network of 
coaxial cables, a major deterrent in the spread of broadband has been the 
exorbitant cost of the cable modem. They come at around Rs 15,000. The return 
is still not alluring. 
Return on Investment 
Essentially, for the broadband environment the major costs include those of 
the infrastructure and the subscriber. Those who are in the process of 
optical fibre networks are investing about Rs 100-200 crore for covering 
small towns to large cities. 
More than 15 companies have already acquired infrastructure providers' 
licences, which enable them to set up the network, right of way, towers and 
infrastructure for end-to-end connectivity. These companies include industry 
heavyweights like Reliance, Bharti, RPG, Satyam Infoway and Shyam. Two public 
sector companies, Power Grid Corp. of India and Gas Authority, have also 
entered the race. Spectranet, Reliable Internet, ICE Net.Net, RPG Netcom, 
Atlanta Capital, Potential Solutions, S. Kumars, Satyam Infotel and Zoom are 
the other companies that have got an IP licence. 
Some of these companies plan to operate telephony services as well. These 
include Reliance, Bharti and Shyam. The IP licences, which are free of cost, 
enable them to set up the backbone network. These companies will acquire 
national long distance (NLD) licences, which has an entry fee of Rs 500 
crore, once their networks are ready. 
Reliance has acquired the IP licence through a new company-Steadfast 
Construction and Engineering-set up specially for this purpose. As per 
Reliance's plans, it will first set up a network in 12 states. In two years, 
it will cover the whole country. It has already started laying the cable in 
major states, including Gujarat, Delhi and Uttar Pradesh. The company's NLD 
plan has synergy with its existing telecom operations. It has basic service 
licence for Gujarat and is operating cellular services in Madhya Pradesh, 
Bihar, Orissa, the North East, West Bengal, Assam and Himachal Pradesh. It 
covers more than 30 per cent of the geographical area of the country. 
Therefore, it will also be able to use the same optical fibre network as the 
backbone for its existing operations as well as for carrying long-distance 
calls. 
Similarly, Bharti has also announced its plans to enter the NLD service 
segment. Through Spectranet, Bharti would be able to offer basic services in 
Delhi and Bangalore, much ahead of the other players like Reliance and Essar. 
Bharti, which has itself laid about 100 km of optic fibre in Delhi, has 
applied for basic telephony licences in eight states, including Delhi and 
Karnataka. 
Great Expectations 
Despite the hype, worldwide broadband penetration is presently very low. And 
India is no exception. Take, for example, the United States where only 1.8 
per cent of homes have broadband access, while 27 per cent have narrowband 
access. However, most analysts say that in the next five years, at least 50 
per cent of online homes in the US will have broadband access via modems. 
However, the Asia-Pacific region is moving faster than the West as far as 
broadband connectivity is concerned. For instance, Singapore is fully 
broadband-wired. Similarly, Taiwan also has an extensive broadband network in 
place. In India, it is expected that seven companies will soon be offering 
their fibre-optic cable network commercially. Internet access via cable will 
make further inroads into consumer homes as bandwidth prices shrink. It will 
find more consumers in the institutional segment. But then even the cable TV 
penetration is expected to grow only about 15 per cent in 2001. That makes 
broadband initiative limp.

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