California Power Crisis in a Nutshell: David Wilson (Update1)
Bloomberg, 01/19/01

California Averts Blackouts; Regulators Take Action (Update3)
Bloomberg, 01/19/01

Richardson Orders Natural Gas Sales Into California (Update2)
Bloomberg, 01/19/01

USA: ANALYSIS-Utilities no longer your father's Oldsmobile.
Reuters English News Service, 01/19/01

EOTT Energy Partners, L.P. Declares Quarterly Cash Distribution
PR Newswire, 01/19/01

BANDWIDTH BEAT: Number Of Routes In Price Table Explodes
Dow Jones Energy Service, 01/19/01

USA: UPDATE 1-Bush adviser opposes cap on Western power prices.
Reuters English News Service, 01/19/01

Pennsylvania PUC Blasts GPU for Comparison to California
Bloomberg, 01/19/01

Enron and Owens-Illinois Sign Long-Term $2.2 Billion Energy Management 
Agreement
PR Newswire, 01/19/01

USA: Enron subsidiary, Owens-Illinois in energy deal.
Reuters English News Service, 01/19/01



California Power Crisis in a Nutshell: David Wilson (Update1)
1/19/1 17:20 (New York)

California Power Crisis in a Nutshell: David Wilson (Update1)

     (Adds dollar amount of Southern California Edison's last
default and references to bond insurers, Fitch and electricity
Board; updates federal response. Commentary. David Wilson is a
columnist for Bloomberg News. Opinions expressed are his own.)

     Princeton, New Jersey, Jan. 19 (Bloomberg) -- Californians
have suffered power blackouts. The state's two largest utilities
have defaulted on debt and failed to make power payments. State
and federal officials are working on solutions. The following
guide is designed to explain what, and who, is behind it all.

                             The Issue

     California's two largest utilities must pay more for power
than they can charge under a 1996 utility-deregulation law, which
froze rates until March 2002. They have racked up more than $11.5
billion in power-related debt. Out-of-state suppliers have balked
at selling electricity and natural gas to them because of concern
that they may not get paid.
     The price of power to California utilities more than
quadrupled during 2000 amid a surge in the cost of natural gas,
which more than half the power plants in the state burn. Natural
gas rose as much as 25-fold during December.

                           The Companies

     PG&E Corp. (ticker symbol PCG): Owner of Pacific Gas &
Electric Co., California's largest utility. Its shares have lost
55 percent during the past year, and it's one of only two stocks
in the Dow Jones Utilities Average to drop during that period.
     The unit's losses on power purchases totaled $6.6 billion at
the end of last year. On Wednesday, PG&E defaulted on $43 million
of commercial paper and the utility unit defaulted on another $33
million. The unit has a $583 million power bill due on Feb. 1, and
another $2.12 billion is due by March 2.
     Edison International (EIX): Owner of Southern California
Edison Co., the state's second-largest utility. Its stock price
has fallen 67 percent in the last 12 months, making it the worst
performer among the Dow utility stocks.
     Power-buying losses at the unit totaled $4.5 billion as of
Dec. 31. The utility defaulted Tuesday on $230 million of bonds
and failed to make $366 million of payments for power. Yesterday
it defaulted on $32 million of commercial paper. Another $378
million of power payments are due this month.
     Power suppliers: Include Calpine Corp. (CPN), Duke Energy
Corp. (DUK), Dynegy Inc. (DYN), Enron Corp. (ENE), Reliant Energy
Inc. (REI), Sempra Energy (SRE), the Southern Energy Inc. (SOE)
unit of Southern Co. (SO) and Williams Cos. (WMB).
     Natural-gas suppliers: Include Coastal Corp. (CGP), Duke
Energy, the J. Aron & Co. unit of Goldman Sachs Group Inc. (GS),
Sempra Energy and Western Resources Inc. (WR).

                          The Financiers

     Banks: Bank of America Corp. (BAC) and J.P. Morgan Chase &
Co. (JPM) arranged a total of $4.2 billion in loans. They refused
Wednesday to let PG&E and Pacific Gas & Electric borrow part of a
$1 billion credit line, leading to the commercial-paper default.
     Ace Ltd. (ACL): Bermuda-based insurance company. A unit has
about $14 million of reinsurance on the two utilities' bonds and
about $125 million in debt assumed in credit-default swaps, which
protect bondholders against defaults. ``Ace believes that any loss
would be substantially less,'' it said in a statement.
     Bond insurers: MBIA Inc. (MBI), the largest U.S. bond
insurer, guaranteed more than $1 billion of Edison's and PG&E's
bonds. Ambac Financial Group Inc. (ABK) said its exposure totals
about $150 million. Smaller amounts are at risk for Financial
Security Assurance Co. and Financial Guaranty Insurance Co.

                        The Rating Services

     Standard & Poor's: Said Dec. 13 that it might cut ``A''
ratings on the parent companies and ``A+'' ratings on the units.
Downgraded them to ``BBB-,'' its lowest investment-grade rating,
on Jan. 4. Lowered them to ``CC'' on Tuesday except for Southern
California Edison, cut to ``D'' because of its default. S&P may
also reduce ratings even more.
     Moody's Investors Service: Said Dec. 11 that it may lower
``A3'' ratings on PG&E and Edison, along with ``A2'' ratings on
their utility units. Downgraded them all to ``Baa3,'' its lowest
investment-grade rating, on Jan. 5. Lowered ratings on the parent
companies to ``Caa3'' and their units to ``Caa2'' earlier this
week. All may be cut further.
     Fitch IBCA: Said Nov. 7 that it might cut ``A'' and ``A+''
ratings on senior unsecured debt of Edison and its utility unit.
and its ``A'' rating on Pacific Gas & Electric's first mortgage
bonds. Downgraded Edison and its unit to ``A-'' on Dec. 11, to
``CCC'' on Jan. 4, and to ``CC'' on Tuesday. Cut the mortgage
bonds to ``A-'' on Dec. 11 and to ``B-'' on Jan. 4.

                           The Agencies

     California Department of Water Resources: Administers the
state's water systems. Started buying power on behalf of the two
utilities in January. Can spend as much as $400 million on power
under a bill passed yesterday.
     California Independent System Operator: Owns the system that
delivers three-quarters of the state's electricity. Imposes power
emergencies as needed.
     California Power Exchange: Buys power for utilities.
Suspended the two utilities' trading privileges after Southern
California Edison failed to make a $215 million payment and PG&E
failed to meet a new requirement that it post collateral.
     California Electricity Oversight Board: Five-member state
panel that governs both the Independent System Operator and the
Power Exchange.
     California Public Utilities Commission: Regulates utilities.
Granted rate increases averaging 10 percent to the two utilities
on Jan. 4. The increases are effective for 90 days. PG&E and
Edison wanted 26 percent and 30 percent, respectively.
     Federal Energy Regulatory Commission: U.S. agency that
oversees utilities. Issued rules Dec. 15 that freed California
utilities from a requirement to buy power through the exchange.
Has rejected proposals for caps on the power prices they pay.

                          The Background

     Power supplies are so tight that California can have an
emergency even if only a few plants go off line for repairs or
malfunction. Even ocean swells can result in production cuts, as
they can clog plants' coolant intakes with sea kelp.
     About two-thirds of California's power plants are more than
30 years old. The last major plant was built more than a decade
ago, before the state toughened its emissions standards. Demand,
especially from companies making products such as computers and
semiconductors, has grown along with the state's economy.

                          The Emergencies

     Stage One: Power reserves for hydroelectric plants fall to
within 5 percent of demand, and reserves for all other types of
plants fall to within 7 percent of demand.
     Stage Two: Power reserves from all types of plants fall to
within 5 percent of demand.
     Stage Three: Power reserves fall to within 1.5 percent of
demand. Can lead to rolling blackouts in parts of the state. The
first alert of this type happened on Dec. 7; the first blackouts
happened Wednesday.

                        The State Response

     Davis declared a state of emergency Wednesday, freeing the
Department of Water Resources to spend money in its budget and the
state's general fund to buy power on the utilities' behalf.
California's legislature then approved $400 million in outlays.
     Legislators are working on a bill, proposed by Davis, that
would let the state buy as much as $3.5 billion of power a year
under multiyear contracts and sell it to utilities at cost. The
plan sets a price of $55 a megawatt hour, below the utilities'
average selling price of $72 after the rate increase. Davis has
held talks with power generators about the length and price of
contracts; he hasn't reached any agreements yet.
     Additionally, legislators have discussed allowing Pacific Gas
& Electric and Southern California Edison to refinance the power-
purchase debt by selling bonds.

                       The Federal Response

     Energy Secretary Bill Richardson issued an order Dec. 14 that
required power suppliers to sell electricity in California. The
order was extended Jan. 11 and Wednesday, and is scheduled to
expire next Tuesday. Richardson, who leaves office tomorrow with
President Bill Clinton, signed a similar order for natural-gas
suppliers that Davis had requested.

                            The Outcome

     Very much in doubt. Duke Energy, Dynegy, Reliant Energy and
Southern Energy were prepared to force the two utilities to file
for bankruptcy before the emergency spending bill was set into
motion, Davis said.

--David Wilson in the Princeton newsroom (609) 279-4085 or
dwilson@bloomberg.net/jmg



California Averts Blackouts; Regulators Take Action (Update3)
1/19/1 16:29 (New York)

California Averts Blackouts; Regulators Take Action (Update3)

     (Adds details on gasoline supplies starting in fourth
paragraph. For a special report on the California energy crisis,
see {EXTRA <GO>})

     Sacramento, California, Jan. 19 (Bloomberg) -- California
averted a third straight morning of intermittent power blackouts
as state and federal officials moved to ensure a steady supply of
power to consumers and businesses.
     Facing less power demand as the weekend approaches, state
authorities said they haven't ordered further outages today. The
California Independent System Operator, which runs three-quarters
of the state's power grid, kept its highest power alert in place.
     State regulators blocked California's two largest utilities
from taking action on their own to cut services to customers. The
measure by the California Public Utilities Commission came after
state lawmakers yesterday approved $400 million to buy power for
the cash-strapped utilities.
     U.S. Energy Secretary Bill Richardson, who steps down
tomorrow, said today he will sign an emergency order requiring
natural-gas producers to sell in California.
     The utilities, PG&E Corp.'s Pacific Gas & Electric and Edison
International's Southern California Edison, are on the verge of
bankruptcy. A 1996 deregulation law caps rates they can charge
consumers, and they have to pay more to power generators because
of rising demand and short supplies.

                          How Many Days?

     The legislation passed yesterday doesn't address PG&E and
Edison's mounting debts, which total more than $11.5 billion. The
money may not last as long the 12 days that state legislators had
hoped, either, analysts said.
     ``With prices going the way they are in the wholesale market,
$400 million or $500 million is not going to last much more than
seven days, let alone 12,'' said Paul Patterson, a utility analyst
with Credit Suisse First Boston.
     PG&E's shares rose 44 cents to $10.19 and Edison's declined 6
cents to $8.94. The stocks are the two worst performers in the Dow
Jones Utilities Average during the past year.
     Fuel supplies are also an issue. Valero Energy Corp., which
produces 10 percent of the state's gasoline, said the state may
soon face shortages of gasoline because Kinder Morgan Inc.'s
California pipeline -- one of the West Coast's largest -- was
disrupted by blackouts.
     Jay McKeeman, executive vice president of the California
Independent Oil Marketers Association, said he wrote Davis
yesterday to warn that refineries could be forced to shut unless
they can be assured their usual flow of fuel.

                     `Interruptible' Customers

     The pipeline, which distributes almost 1 million barrels of
gasoline, jet fuel and diesel a day, has been shut for 12 hours to
18 hours a day since Wednesday, said Larry Pierce, a Kinder Morgan
spokesman. The pipeline ran last night and was idled again this
morning, he said.
     Kinder Morgan's pipeline is an ``interruptible'' customer,
making it among the first to lose power amid shortages. Even if
scattered blackouts are avoided today, customers like it still
face the possibility of power cuts.
     The state's utilities are paying as much as 20 times more for
electricity than they did a year ago as they face the effects of
deregulation, which led them to sell generating plants. High
demand, a shortage of available plants and unusually low output
from hydroelectric dams are compounding the problem.
     Pacific Gas & Electric has said six companies, accounting for
36 percent of daily natural-gas supply, may stop deliveries by
Tuesday. The utility said it has only been able to buy 60 percent
of the gas it needs for each day next month, possibly forcing it
to cut supplies to power plants that use the gas to produce
electricity.

                        `Least Bad Option'

     President-elect George W. Bush opposes one possible remedy
for the utilities: limits on the wholesale prices that they pay
for electricity.
     ``The president-elect does not think price controls are an
answer to our nation's energy problems,'' Ari Fleischer, Bush's
spokesman, said during a reporters' conference call. ``He sees
very little evidence that price controls work. That is a very
unlikely solution in his opinion.''
     The Federal Energy Regulatory Commission, which oversees
utilities, has turned down proposals for price caps. California
Governor Gray Davis and other state officials support caps. U.S.
Senator Dianne Feinstein plans to introduce a bill Monday that
would allow the U.S. Secretary of Energy to impose them. Both
Davis and Feinstein are Democrats.
     State legislators rushed their spending measure into law
after Davis declared a state of emergency Wednesday. The state's
four largest power providers had threatened to push Pacific Gas &
Electric and Southern California Edison into bankruptcy if the
bill wasn't passed.
     ``This bill is the least bad option to get us through the
next few days,'' said Assemblyman Fred Keeley, the state's No. 2
Democrat. ``It will hopefully give us time to put a comprehensive
solution in place.''

                           More Defaults

     The legislature is also drafting a separate bill that would
allow the state to buy power under multiyear contracts and limit
the price it pays at $55 a megawatt hour. Customers currently pay
about $72 on average.
     While many generators are balking at that proposal, Davis
said he believed producers will eventually accept prices close to
$55, especially if the state agrees to sealed bids for contracts.
     Southern California Edison defaulted on $32 million of
commercial paper yesterday. It expects to default on $223 million
more of the money-market securities by Jan. 31, according to a
Securities and Exchange Commission filing.
     The utility also forfeited millions of dollars in power
contracts to the California Power Exchange yesterday after it
failed to make a $215 million payment. The foreclosure was a first
for the exchange, which buys power from generators on behalf of
utilities.
     Earlier this week, Edison suspended $596 million in payment
to bondholders and utilities. In addition, PG&E defaulted on $76
million in commercial paper.

--Peter Robison in Seattle (206) 406-1656 or robison@bloomerg.net
and David Ward in Sacramento with reporting by Daniel Taub in San
Francisco, Dennis Walters in Ojai, California, David Evans in Los
Angeles, Christopher Martin in Chicago, Jonathan Berr, Stacie
Babula and Jim Polson in Princeton, Liz Goldenberg in New York,
and Liz Skinner in Washington through the Princeton newsroom (609)
279-4000 / dw


Richardson Orders Natural Gas Sales Into California (Update2)
1/19/1 17:40 (New York)

Richardson Orders Natural Gas Sales Into California (Update2)

     (Adds Richardson comment in fourth paragraph, details of
order in fifth through eighth.)

     Washington, Jan. 19 (Bloomberg) -- U.S. Energy Secretary Bill
Richardson ordered natural-gas suppliers to keep selling to
California to keep homes warm and hospitals running after two days
of rolling blackouts.
     California Governor Gray Davis asked for the emergency order
because suppliers are threatening to stop shipments to PG&E
Corp.'s Pacific Gas & Electric, fearing the state's largest
utility will default on payments.
     Utilities owned by PG&E and Edison International have said
they face bankruptcy because state laws won't let them pass on the
soaring power costs to customers. Pacific Gas & Electric said a
cut in gas supplies would affect homes, hospitals, businesses, oil
refineries and power plants.
     ``I am very concerned that such supply disruptions could
endanger the health and welfare of PG&E's residential and
commercial gas customers and could exacerbate the already
precarious condition of California's electric grid,'' Richardson
said in a statement issued on his last day in office.

                         Setting Terms

     The emergency order, requiring any of PG&E's natural gas
suppliers to keep selling to the utility according to contracts in
place the past 30 days, will keep gas flowing as California,
utilities and generators ``work to find a solution to the current
electricity and financial crisis,'' Richardson said.
     If a supplier and PG&E don't agree on the terms of the
contracts, the energy secretary will set the terms, the department
said in a statement.
     The federal order runs through Tuesday. It will be up to the
next energy secretary whether to extend it. Richardson said he has
spoken with Spencer Abraham, who President-elect George W. Bush
has nominated to head the department, about the crisis.
     President Bill Clinton earlier today signed a memorandum
finding that a natural-gas supply emergency exists in central and
northern California. The document directs Richardson to ensure
that gas is available for high-priority uses, such as home heating
and power generation.
     Last month, Richardson ordered power generators to sell
electricity to California after suppliers in the Northwest halted
sales. That order also expires Tuesday.
     PG&E shares rose 44 cents to $10.19. Edison fell 6 cents to
$8.94. They've both fallen about 63 percent since Nov. 1.

                         Gas Supplies

     Pacific Gas & Electric said six natural-gas suppliers,
accounting for 36 percent of its daily supply, told the utility
they have stopped delivering gas or may stop deliveries by
Tuesday. Other suppliers, accounting for 30 percent of daily
supplies, are considering stopping deliveries, the utility said.
     One of PG&E's gas suppliers, Western Gas Resources Inc.,
stopped deliveries on Jan. 12. The company ended a contract to
sell 5 million cubic feet of natural gas a day after the utility
``stopped paying us according to the terms of the contract,'' said
Ron Wirth, Western Gas spokesman.
     Wirth said company officials haven't seen Richardson's order
yet so couldn't comment on it.
     El Paso Energy Corp., which sells natural gas to PG&E through
its merchant energy unit, said it has been honoring its existing
contracts with the California utility.
     ``We are still backing the existing contracts to those
companies, as of this moment,'' said spokeswoman Kim Wallace.
``This is a minute-to-minute situation.''
     The order will impact El Paso Energy because it sells natural
gas into California, she said. ``The question is who will pay?''

--Liz Skinner in Washington, (202) 624-1831 or
lskinner@bloomberg.net and Daniel Taub in San Francisco, with
reporting by Jim Kennett in Houston and Bradley Keoun in New York,
through the Princeton newsroom, (609) 279-4000/pjm/shf


USA: ANALYSIS-Utilities no longer your father's Oldsmobile.
By Paul Thomasch and Jonathan Stempel

01/19/2001
Reuters English News Service
(C) Reuters Limited 2001.

NEW YORK, Jan 19 (Reuters) - Fund manager Don Cox left a meeting with Exxon 
Mobil executives last September shaking his head, knowing he would stay as 
far away as possible from California utilities. 
During the meeting in downtown Chicago, four executives from Exxon Mobil 
Corp., the world's No. 1 energy company, told Cox to expect natural gas 
prices to fall to just $1 per million British thermal units (mmbtu).
His conclusion? Even the industry's top brass couldn't see the coming power 
crisis, one that would hit California's utilities particularly hard. 
"I walked away from that meeting telling my clients to load themselves to the 
hilt with natural gas stock and don't get involved with the California 
utilities," said Cox, chairman and chief strategist at the Harris Investment 
Management Fund, which manages $16 billion. 
It was the right call. 
Natural gas hit $10 per mmbtu three months later, the last in a chain of 
events that sent power prices through the roof and sent California's 
deregulated electricity market to the brink of collapse. 
Now, Pacific Gas and Electric Co., a unit of San Francisco-based PG&E Corp. 
and Southern California Edison, a unit of Rosemead, Calif.-based Edison 
International, are flirting with bankruptcy, stock-and bondholders have seen 
billions of dollars melt away, and Wall Street has been forced to reassess 
utilities as an investment. 
"This is going to once and for all eliminate the idea that utilities are a 
homogenous industry," said Cox. "This is a group that cries out for a whole 
new sort of analysis." 
SAFE NO MORE 
For decades, utilities have been seen as a safe haven for stockholders. 
Returns weren't the stuff of dreams, but there was little risk of losing your 
shirt. 
Electricity deregulation, sometimes successful and in California clearly not, 
has changed that notion. Layers upon layers of power companies have been 
created, from such power marketers as Enron Corp. and generators as Dynegy 
Inc., to distribution utilities such as New York City's Consolidated Edison 
Inc.. 
"The industry has been in a revolution for a couple of years," said Tim 
Ghriskey, a portfolio manager for the $2.2 billion Dreyfus Fund. "It's a much 
more dynamic industry. It's not just buy one, buy all, because they are all 
different." 
Utilities stocks were highly rewarding to investors last year, with the 
Standard & Poor's utilities index surging more than 50 percent. 
California's power crisis has changed that landscape, though. Share prices of 
PG&E and Edison have slid more than 60 percent since early November, and 
dragged down others with them. About 15 percent of the value of the S&P 
utilities index has been wiped out so far this year. 
"Unlike the old utilities, nowadays you can make a lot or lose a lot in a 
hurry," said Ghriskey. 
UTILITIES LOSE GLEAM 
It's not just shareholders who have learned the hard lesson that utilities 
aren't what they once were. Bondholders, too, have been left to wince as top 
credit rating agencies slashed their formerly investment-grade holdings deep 
into junk. 
Still, secured and unsecured bondholders may be in better shape than 
stockholders, ranking ahead of them in the pecking order when it comes time 
to decide what gets distributed in a bankruptcy, if there is one - or two. 
"The sharing of the pain is the one uncertainty from an investor's 
standpoint," said James Spiotto, a partner and default specialist at Chapman 
and Cutler, a Chicago law firm. 
"The solution of a utility bankruptcy is not unlimited pain to the customer 
because there's a limit to what the customer can bear." 
Investors see bids for SoCal Edison's and Pacific G&E's first mortgage bonds 
at around 80 to 82 cents on the dollar, and for their unsecured bonds at 45 
to 50 cents on the dollar. That compares to the pennies bid for bonds of many 
asset-poor start-up telecommunications companies. 
Bill Gross, who oversees $250 billion for Pacific Investment Management Co. 
in Newport Beach, Calif. and is widely considered the most powerful U.S. bond 
fund manager, reckons utilities look more and more like some of those 
telecoms. 
"Obviously investors are now awakening to the fact that utilities are not the 
safe, conservative vehicles that they knew 10 or 20 years ago," he said. 
"It's not your father's Oldsmobile." 
Selling now, however, may not be a good solution because the crisis is fluid, 
some depressed prices could recover, and the market for electric power won't 
disappear the way some telecoms and dot-coms do. 
"Generally, the solution for a distressed utility is strung out, and can 
involve a conversion of debt to equity," said Spiotto. "The real concern is 
to save the system." 
First mortgage bondholders, he said, usually do well in a bankruptcy, and 
could get their principal back, because they have "the system" as collateral. 
No one, he said, will allow California's lights to dim for good. 
CLOUDED BY UNCERTAINTY 
What occurred in California is something of a perfect storm, a situation 
brought together by a poorly constructed deregulation plan, environmental 
hurdles, cold weather and a shortage of natural gas production in the United 
States. 
PG&E and Edison may indeed go under, investors said, or the nation's richest 
state could construct a way to bail them out. 
Either way, stockholders are decidedly unwilling to risk too much of their 
money on PG&E or Edison at the moment. 
"It's too uncertain right now; the situation makes us too nervous," said 
Ghriskey, who doesn't own either utility's shares. "At some point there could 
be a huge buying opportunity, but first we have to get some visibility on an 
outcome." 
The crisis also casts doubt over companies such as Reliant Energy Inc., Duke 
Energy Corp., and Southern Energy Inc., which face hundreds of millions of 
dollars of credit exposure because they sell power to the utilities. 
What's more, it throws a cloud over how deregulation will progress elsewhere 
in the country. 
"I think we're locked into several years of energy problems," said Cox of 
Harris Investment Management. 
Like his counterparts in the bond market, he sees a parallel with those "new 
economy" companies. "From now on, talking about utilities as a group will be 
as problematic as talking about tech stocks as a group," he said. 
But will the value of their securities recover? 
"Hope springs eternal," said Spiotto, the Chicago lawyer.

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



EOTT Energy Partners, L.P. Declares Quarterly Cash Distribution

01/19/2001
PR Newswire
(Copyright (c) 2001, PR Newswire)

HOUSTON, Jan. 19 /PRNewswire/ -- EOTT Energy Partners, L.P. (NYSE: EOT) (the 
Partnership) announced today a distribution of $0.475 per common unit for the 
fourth quarter of 2000, or $1.90 on an annualized basis. The fourth quarter 
distribution is payable Feb. 14, 2001, to unitholders of record as of Jan. 
31, 2001. 
EOTT Energy Partners, L.P. is a major independent marketer and transporter of 
crude oil in North America. EOTT transports most of the lease crude oil it 
purchases via pipeline which includes 8,300 miles of active intrastate and 
interstate pipeline and gathering systems and a fleet of 260 owned or leased 
trucks. EOTT Energy Corp., a wholly-owned subsidiary of Enron Corp. (NYSE: 
ENE), is the general partner of EOTT Energy Partners, L.P. with headquarters 
in Houston. The Partnership's Common Units are traded on the New York Stock 
Exchange under the ticker symbol "EOT". Media Relations Contact: 
Kimberly Nelson 
(713) 853-3580 
Investor Relations Contact: 
Scott Vonderheide 
(713) 853-4863

/CONTACT: media, Kimberly Nelson, 713-853-3580, or investor relations, Scott 
Vonderheide, 713-853-4863, both of EOTT Energy Partners, L.P. / 15:44 EST 

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


BANDWIDTH BEAT: Number Of Routes In Price Table Explodes
By Michael Rieke

01/19/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

A DOW JONES NEWSWIRES COLUMN 

HOUSTON -(Dow Jones)- The number of city-pairs listed in the daily Dow Jones 
bandwidth price table exploded this week to 10 from two.
The table was started in September, listing only prices for DS3 bandwidth 
between New York and Los Angeles. That's the route that had the most traffic 
and therefore would be the first to bring some liquidity to the nascent 
bandwidth market. 
The table originally listed only prices for DS3 bandwidth along that route. 
Later prices were added for OC3 capacity between New York and Los Angeles, 
followed by prices for DS3 and OC3 bandwidth between New York and Washington, 
D.C. 
Earlier this month, DS3 capacity between New York and Washington had the 
distinction of being the first listing dropped from the price table. 
One component in the value of a deal is mileage, so the fewer the miles, the 
less money in the deal. Because New York is so close to Washington, D.C., 
traders decided there wasn't enough money involved to continue trying to do 
deals for DS3 bandwidth along that route. They'll only quote prices for OC3 
capacity along that route. 
They also decided there wasn't enough money involved in one-month deals for 
OC3 capacity along that route. So now they're only making a market for 
three-month deals on that route. 
This week a broker told Dow Jones Newswires that a market was being quoted 
for a new route: Los Angeles to San Francisco, mostly for DS3 bandwidth but 
also for two one-year contracts for OC3 capacity. 
The broker wouldn't say which company was the market maker for that route. 
For a simple definition, a market maker is a company that will give a bid and 
an offer in a market. Then it has to be willing to buy at the bid price and 
sell at the offer price. 
The first guess was, of course, Enron Corp. (ENE) because they've been very 
aggressive in making markets in bandwidth. Just take a look at the bandwidth 
bids and offers on Enron Online, if you have access. 
But Enron isn't the market maker for the Los Angeles-to-San Francisco route. 
They prefer the nearby Los Angeles-San Jose route and are making a market for 
it in DS3 and OC3. 
And it isn't El Paso Energy (EPG) either. They were the second company 
venture into bandwidth as a market maker. Aquila Broadband Becomes Third 
Bandwidth Market Maker 

A little research revealed that Aquila Broadband Services, a unit of 
Utilicorp United Inc. (UCU), is the market maker for the Los Angeles-San 
Francisco route. They're the third market maker in bandwidth. 
The other new routes being quoted are New York-Miami (DS3 and OC3); 
Seattle-Salt Lake City (OC3); Seattle-Los Angeles (OC3); Seattle-Portland, 
Ore. (OC3); Los Angeles-Las Vegas (DS3 and OC3); and Los Angeles-Dallas 
(DS3). 
A quick check of the bids and offers for the new markets reveals that the 
quotes are wide. When making a new market, a company doesn't want to risk 
making a mistake by bidding too high or offering too low. If you bid too 
high, sellers will jump all over your bid. If you offer too low, buyers will 
jump all over your offer 
In the new markets, there's generally $0.0015-$0.0020 per DS0 mile per month 
between the bid and the offer. 
In the most mature market, New York-Los Angeles for DS3, the bids and offers 
for some contracts are separated by only $.0001/DS0 mile/month, sometimes 
even less. 
In fact, another decimal place had to be added to the quotes in the price 
table. Some quotes for DS3 bandwidth between New York and Los Angeles have 
become so tight that the bid and offer sometimes were separated by only 
$.00005/DS0 mile/month. 
Traders are willing to talk about the new markets because they are hoping 
they will attract more attention followed by more buyers and sellers. As 
those markets become more liquid, the traders predict, the bids and offers 
will move closer together. 
Some carriers aren't going to like seeing quotes for more bandwidth routes. 
More quotes mean more price transparency. More price transparency means more 
questions from customers. 
Some carriers already argue that the prices quoted in the bandwidth market 
aren't "real" prices, that they are too low. If that's true, traders say, the 
carriers should be buying. 
At least some telecom analysts agree. Steven Kamman, an analyst for CIBC 
World Markets, has already said that in this column. 
The smartest course for high-cost carriers, like WorldCom (WCOM), is to stop 
investing in their own networks and start buying wholesale capacity from 
low-cost carriers, Kamman says. 
If and when they do, the bandwidth price table should grow even bigger. 
-By Michael Rieke, Dow Jones Newswires; 713-547-9207; michael.rieke@wsj.com

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

USA: UPDATE 1-Bush adviser opposes cap on Western power prices.

01/19/2001
Reuters English News Service
(C) Reuters Limited 2001.

WASHINGTON, Jan 19 (Reuters) - A proposal to cap prices for wholesale 
electricity in the West in hopes of easing California's power crisis "would 
start spreading the shortage around" to other states, an adviser to the 
incoming Bush administration said on Friday. 
"That is not even a short-term solution," said Ken Lay, head of Enron Corp. 
and an energy advisor to incoming President George W. Bush, a former Texas 
oilman who takes the oath of office on Saturday.
Enron is the largest power marketer in the United States, and a cap would 
limit the prices it and other wholesalers could charge to utilities. 
Lay told reporters the federal government should limit itself to an advisory 
role, letting California leaders resolve a "pretty much self-inflicted 
problem." Wholesale power prices were deregulated under the landmark 1996 law 
but retail rates were not. 
A proposal by California officials to cap wholesale power prices in the West 
as a way to help their state would merely "start spreading spreading the 
shortage around to other states," Lay said. 
California endured two days of rolling blackouts this week as two large 
utilities struggled under huge debts incurred buying electricity at higher 
wholesale prices than they can recoup under the retail rates they are allowed 
to charge. 
Outgoing U.S. Energy Secretary Bill Richardson said he would issue an 
emergency order later on Friday to require out-of-state natural gas suppliers 
to sell fuel to a cash-short California utility so it can continue to 
generate electricity. 
In the short term, Lay said, the state government will have to "buy the power 
to fill the short positions of the utilities." The longer term solution will 
probably include longer-running contracts to take advantage of electric 
prices that are expected to fall later this year. 
"The biggest problem in California is consumers are not going to see the 
price signals. If they don't see the price signals, they are not changing 
behavior so the problem is going to get worse," Lay said. 
"Painful as it is, they need to see the price signals and start modifying 
behavior to reduce demand until we get new supplies." 
California Gov. Gray Davis was expected to sign a bill allowing the state to 
spend $400 million to buy power on behalf of utilities. The two California 
utilities, PG&E Corp's Pacific Gas & Electric Co. and Edison 
International'sSouthern California Edison, have run up about $12 billion of 
debt and are teetering on the edge of bankruptcy. Their bankruptcy would rank 
among the nation's biggest, hitting creditors ranging from retirees invested 
in traditional safe havens to institutional corporations, analysts said. 
The Clinton administration has tried to help California by issuing week-long 
orders that force out-of-state power generators to sell extra electricity to 
the two largest California utilities. 
Asked how long creditors could continue to show forbearance toward utilities 
with mounting debt, Lay said Enron had moved to mitigate its exposure. 
"The generators ought to speak for themselves. They're the ones that have 
continued to operate plants and try to keep the lights on until the problem 
is worked out," Lay said."But I'm sure it cannot be long. They have to look 
out for their shareholders too."

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



Pennsylvania PUC Blasts GPU for Comparison to California
1/19/1 17:1 (New York)


    HARRISBURG, Pa., Jan. 19 /PRNewswire/ -- The chairman of the state Public
Utility Commission (PUC) this afternoon criticized GPU Energy for deliberately
alarming consumers and elected officials by suggesting the energy crisis
crippling California could easily affect Pennsylvania.
    "I am outraged that GPU would even hint that a similar energy crisis could
happen to Pennsylvania," said PUC Chairman John M. Quain.  "This appears to be
a thinly veiled attempt to influence a decision pending before the PUC.
    "I assure consumers and legislators that what is happening in California
will not happen in our state," he said.  "GPU has an economic problem, not a
supply problem."
    GPU in November petitioned the PUC for the right to collect from customers
in future years more than $82 million in projected losses from purchasing
electricity.  Under GPU's 1998 restructuring settlement, generation rates for
customers are capped through 2010 for Met-Ed customers and 2009 for Penelec
customers.  The two companies are subsidiaries of GPU.
    The PUC sharply criticized the utility for blaming their losses on
wholesale market conditions when in fact the losses result from GPU's own
business decisions.
    "The decision to divest their generation was made in their boardroom,"
said Kevin Cadden, PUC spokesman.  "The decision not to enter into long-term
power contracts with suppliers was made in their boardroom.  These decisions
were not made by the PUC."
    In recent weeks Quain has stressed that three critical factors separate
Pennsylvania from California.  They include:

    -- Pennsylvania produces more power than it consumes and therefore does
       not face an energy shortage like that in California.  The state is a
       net exporter of electricity and the second largest producer of
       electricity in the U.S.
    -- Pennsylvania did not require utilities to sell their generation plants
       as a part of restructuring as California did.  Nearly all of
       Pennsylvania's electric utilities own their own generating plants.
       GPU chose to sell all of their power plants.
    -- Pennsylvania does not prevent utilities from entering into long-term
       power contracts with suppliers.  In California, utilities are forced
       to buy electricity on the spot market, buying power at current market
       rates.  GPU chose not to enter into a sufficient number of these
       contracts.

    Cadden said GPU's request would follow standard PUC regulations.  "The
request for relief will be decided on the basis of the record and law
developed in the pending proceeding, and will not be swayed by unfounded
comparisons to California," he said.
    Pennsylvania's Electric Choice Program is widely recognized as the most
successful and best run in the country, having saved customers nearly
$2.8 billion to date in guaranteed rate cuts and savings.  More than 550,000
customers have selected an alternative electric supplier under the program.
    For more information about the PUC, visit their website at
http://puc.paonline.com.

SOURCE  Pennsylvania Public Utility Commission
    -0-                             01/19/2001
    /CONTACT:  Kevin Cadden, Communications Manager of the Pennsylvania Public
Utility Commission, 717-787-5722 or fa


Enron and Owens-Illinois Sign Long-Term $2.2 Billion Energy Management 
Agreement

01/19/2001
PR Newswire
(Copyright (c) 2001, PR Newswire)

HOUSTON, Jan. 19 /PRNewswire/ -- Enron Energy Services, a subsidiary of Enron 
Corp. (NYSE: ENE), and Owens-Illinois, Inc. (O-I), a leading producer of 
glass and plastics packaging, announced today a ten-year energy management 
agreement. The agreement covers 53 Owens-Illinois manufacturing facilities in 
20 states and will cover projected energy purchases in excess of $2 billion. 
Through this initial agreement, Enron will work with Owens-Illinois to manage 
the supply of electricity and natural gas to O-I facilities and will continue 
to look for ways to reduce O-I's aggregate demand.
"Securing affordable, reliable energy is a key element of our strategy to be 
the low-cost producer in every market we serve," said Richard A. Jun, vice 
president of corporate purchasing for Owens-Illinois. "This contract with 
Enron effectively adds its leadership in energy purchasing management to our 
ongoing commitment to cost management, an arrangement that should provide 
savings and reduce our exposure to short-term energy price fluctuations." 
"Our partnership with Owens-Illinois is a showcase of the depth of Enron's 
continuing expansion into the industrial market," said Lou Pai, chairman and 
CEO of Enron Energy Services. "Over the length of this contract, Owens- 
Illinois will see the considerable competitive advantage of their existing 
cost-control strategies significantly enhanced by the addition of our 
expertise in energy efficiency and risk management." 
Owens-Illinois is the largest manufacturer of glass containers in the United 
States, North America, South America, Australia, New Zealand, and China and 
one of the largest in Europe. Approximately one of every two glass containers 
made worldwide is manufactured by Owens-Illinois, its international 
affiliates, or its licensees. O-I also is a worldwide manufacturer of 
plastics packaging with operations in North America, South America, 
Australia, Europe and Asia. Plastics packaging products manufactured by O-I 
include containers, closures and prescription containers. 
Enron Energy Services has built a business to transform the energy 
marketplace by providing integrated energy and facility management solutions. 
Enron currently manages energy at over 28,500 customer sites. Contracts 
signed within the last two years represent a reduction of approximately 8 
billion kilowatt hours of electricity consumption and 18 million Btus of 
natural gas consumption between 2000 and 2012. 
Enron is one of the world's leading electricity, natural gas and 
communications companies. The company, with revenues of $40 billion in 1999 
and $60 billion for the first nine months of 2000, markets electricity and 
natural gas, delivers physical commodities and financial and risk management 
services to customers around the world, and is developing an intelligent 
network platform to facilitate online business. Fortune magazine has named 
Enron "America's Most Innovative Company" for five consecutive years, the top 
company for "Quality of Management" and the second best company for "Employee 
Talent." Enron's Internet address is www.enron.com. The stock is traded under 
the ticker symbol "ENE". 
Contact: Peggy Mahoney of Enron Energy Services, 713-345-7034.


/CONTACT: Peggy Mahoney of Enron Energy Services, 713-345-7034/ 17:17 EST 

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


USA: Enron subsidiary, Owens-Illinois in energy deal.

01/19/2001
Reuters English News Service
(C) Reuters Limited 2001.

HOUSTON, Jan 19 (Reuters) - Enron Energy Services, a subsidiary of Enron 
Corp. , said Friday it agreed to a 10-year energy management agreement with 
glass container maker Owens-Illinois Inc. . 
The deal, which cover 53 Owens-Illinois manufacturing facilities in 20 
states, will cover projected energy purchases of more than $2 billion, the 
company said.
"This contract with Enron effectively adds its leadership in energy 
purchasing management to our ongoing commitment to cost management, an 
arrangement that should provide savings and reduce our exposure to short-term 
energy price fluctuations," Richard Jun, Owens-Illinois' vice president of 
corporate purchasing, said in a statement. 
Enron shares finished off 1-3/16 at $70-7/8 on the New York Stock Exchange 
Friday, between a 52-week high of $90-9/16 and a 52-week low of $52-5/8. 
Owens-Illinois' shares, meanwhile, closed unchanged at $6-7/8, also on the 
Big Board. The company's stock has a a 52-week high of $21-11/16 and a 
52-week low of $2-1/2. 
Gregory Cresci, New York Newsroom (212) 859-1700.

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