FYI:  follow-on wire story on EES NEPOOL issue.  Great quote from secretary and general counsel from NEPOOL.
Peggy
---------------------- Forwarded by Peggy Mahoney/HOU/EES on 10/26/2001 04:29 PM ---------------------------


djcustomclips@djinteractive.com on 10/26/2001 05:19:23 PM
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Subject:	Enron Corp.: Enron Unit,New England Market Downplay Report Of Default


Enron Unit,New England Market Downplay Report Of Default
By Kristen McNamara

10/26/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

  NEW YORK -(Dow Jones)- Enron Corp.'s (ENE) retail sales unit defaulted on its
credit requirement in New England's wholesale power market this month, but the
event was neither unique nor newsworthy, the energy company and the
organization that developed the market's rules said Friday.

  The operator of the region's wholesale power market informed Enron Energy
Services last week that, for the third time in 12 months, it had traded a
greater volume of electricity than allowed by the bond it had posted and was
at risk for expulsion from New England's market.
  But it was administrative mixups, rather than financial problems, that
triggered the warning, which a few other companies have also received in the
past, the market's rulemaker said.

  "I can state with considerable confidence that there have been other
participants" that have defaulted on their credit agreements, "and it's never
been in the news," said David Doot, secretary and general counsel for the New
England Power Pool, which developed the policies governing the region's
electricity market. "My instinct is that this is blown way the hell out of
proportion."

  News of the Enron unit's default appeared in a trade publication and a major
metropolitan newspaper this week, as Enron's dealings with partnerships headed
by its former chief financial officer contributed to a plunge in the company's
stock and bond prices.

  Enron Energy Services never received word that it had defaulted on its
bonding requirement twice before, because both times it corrected the problem
within a day, spokeswoman Peggy Mahoney said.

  The letter sent by ISO New England, which operates the region's power
market, to notify the Enron unit of its third violation was addressed to the
wrong person, delaying the company's response, Mahoney said.

  "Clearly, it was an administrative error that we immediately took care of to
ensure that we would never exceed the volume limit," Mahoney said.

  The company resolved the problem by Oct. 19, Mahoney said. ISO New England
spokeswoman Ellen Foley confirmed Friday that the company had cured its
default.

  It's rare for a company to default three times, but it has happened on
occasion, Foley and Doot said.

  "I won't say it's commonplace, but I won't say it's unusual for a
participant to find itself out of compliance," Doot said. "Those things have
in fact happened from time to time."

  -By Kristen McNamara, Dow Jones Newswires; 201-938-2061;
kristen.mcnamara@dowjones.com



Folder Name: Enron Corp.
Relevance Score on Scale of 100: 100

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