Bandwidth Market: Trade For DS3 Capacity Nets High Price
Dow Jones Energy Service, 07/24/01
USA: Northeast utilities on track to form RTO - PJM chief.
Reuters English News Service, 07/24/01
EnergyBusinessWatch Releases Two-Part Interview With FERC Chairman Curt Hebert
PR Newswire, 07/24/01
Natural Gas Project Decision Due Soon-Venezuelan Official
Dow Jones Energy Service, 07/24/01

USA: Black Hills signs deal for 273-MW Nevada power plant.
Reuters English News Service, 07/24/01

German Energy Blue Chips E.On, RWE Return To Form
Dow Jones International News, 07/24/01
Black Hills To Buy Nev. Power Complex From Enron
Dow Jones News Service, 07/24/01

INDIA: U.S. looks "beyond sanctions" at ties with India.
Reuters English News Service, 07/24/01

Allegheny Energy to split up Hagerstown utility to create company for power 
generation; Permission for IPO sought; Remaining company to distribute energy 
to retail customers
The Baltimore Sun, 07/24/01

FERC Should Oversee All Utilities, Lawmaker Says (Update1)
Bloomberg, 07/24/01

Energy Generators Fall With Gas, Electricity Prices (Update1)
Bloomberg, 07/24/01

Black Hills to Purchase Generation Complex From Enron (Update1)
Bloomberg, 07/24/01

Dan Walters: Blame game over California's energy crisis will continue for 
years
Sacramento Bee, 07/24/01



Bandwidth Market: Trade For DS3 Capacity Nets High Price

07/24/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

HOUSTON -(Dow Jones)- A direct trade done Tuesday for DS3 bandwidth between 
Seattle and Vancouver, B.C., brought one of the highest prices ever recorded 
in the market. 
The deal, priced at two cents a DS0 mile a month, will start as soon as the 
circuit can be provisioned, said a trader.
Direct trades are done by the counterparties themselves without an 
intermediary like a broker. 
Another direct deal was done for DS3 bandwidth between Seattle and Los 
Angeles for a three-month contract that also will start as soon as the 
circuit is provisioned. The price was $0.0075/DS0 mile/month. 
One other trade was done Tuesday for DS3 bandwidth in calendar year 2002 
between New York and Dallas through Enron Corp. pooling points at $0.0015/DS0 
mile/month. 
Pooling points are network interconnection sites where title to bandwidth is 
transferred. They are also used to monitor quality of service. 
-By Michael Riekeand Erwin Seba, Dow Jones Newswires, 713-547-9207, 
713-547-9214; michael.rieke@wsj.com, erwin.seba@dowjones.

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

USA: Northeast utilities on track to form RTO - PJM chief.

07/24/2001
Reuters English News Service
(C) Reuters Limited 2001.

WASHINGTON, July 24 (Reuters) - With the help of a federal mediator, 
Northeast electricity transmission grid operators are on track to combine 
their assets under a common roof, Phillip Harris, chairman of the PJM 
Interconnection, told reporters on Tuesday. 
"I think that's do-able," Harris said, referring to the Federal Energy 
Regulatory Commission's July 11 rule ordering the New York Independent System 
Operator, PJM, PJM West and New England Independent System Operator to form a 
single regional transmission organization (RTO).
All the entities convened Monday in a closed-door hearing before FERC 
Administrative Law Judge Peter Young to begin 45 days of negotiations to 
hammer out the formation of the single Northeast RTO. 
"We can't solve all of the issues, but we can come up with a plan" during 
that time, Harris said. 
RTOs are not likely to be discussed at the FERC commissioners' meeting on 
Wednesday, Harris said. No RTO issues are on the agenda for the final FERC 
meeting before commissioners take a month-long break, an agency spokeswoman 
said. 
The focus of the Wednesday meeting will be refunds for California and other 
Western states that claim power wholesalers overcharged them during the past 
year. 
RTOs have become a priority for FERC, which is looking for ways to make the 
nation's patchwork transmission grid more seamless to overcome bottlenecks in 
moving power between regions. 
FERC recently proposed combining transmission operators into four RTOs to be 
formed in the Northeast, Southeast, Midwest and West. 
"Whether the magic number is four or 10 is somewhat problematic," Harris 
said. 
FERC has praised the PJM system - which serves much of Pennsylvania, New 
Jersey and Maryland - as a model for nationwide RTO building. The agency has 
also turned down New York ISO and Northeast ISO requests to maintain their 
status as free-standing independent system operators. 
PJM has what it takes to make a nationwide model, Harris said. 
"The technology is there to make it happen," he said. 
PJM Interconnection uses a complex computer model and locational marginal 
pricing to calculate prices based on supply, demand and congestion at each 
node on the grid. PJM could apply its model to a larger RTO, Harris said, 
because "it's hard to find something bigger than what we're doing." 
PJM operates about 8,000 miles of transmission lines in Pennsylvania, New 
Jersey and Maryland, Washington D.C., and part of Delaware. It also 
coordinates the flow of about 60,000 megawatts of generation across those 
wires. 
Last week, residential electricity provider NewPower Holdings Inc. complained 
to FERC about the installed capacity charges in the PJM system. The company 
said the PJM charges were "unjust and unreasonable" and discriminated against 
new market players. 
NewPower told FERC it was unfair that companies owning generation plants in 
the region do not have to pay the installed capacity charge, but NewPower and 
others that don't own generating plants must pay high capacity rates.

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

EnergyBusinessWatch Releases Two-Part Interview With FERC Chairman Curt Hebert

07/24/2001
PR Newswire
(Copyright (c) 2001, PR Newswire)

WASHINGTON, July 24 /PRNewswire/ -- FERC Chairman Curt Hebert, in one of his 
most wide-ranging interviews since he was named to head the agency six months 
ago, told EnergyBusinessWatch in a two part series while California may still 
see some blackouts in August the state now appears to have passed a danger 
point. 
"We're not too worried about credit here, but we were certainly getting the 
blame when the prices were high," Hebert said.
"The fact that prices are down and they have been down since the very hour 
the mitigation plan went into effect shows the forward thinking, the ability 
to get things under control of this commission and the hard working staff." 
Hebert sat down with EBW Executive Editor Howard Buskirk July 20 to talk 
about his six months as chairman, what he views as his legacy so far and his 
plans for the future. 
High on his list is a FERC that is now more responsive to markets. 
"A couple years back at FERC, even though they were talking about markets, 
they were very much in their infancy in trying to understand how they work," 
he said. "I would say that FERC now has certainly moved beyond its 
adolescence and trying to act more like an adult ... Hopefully that means 
that there's less regulation in the future." 
Hebert also warned that the commission must make certain it does not turn off 
Wall Street, since the financial community will need to be behind commission 
initiatives to get the right investments. 
"You can't do anything in this business without the confidence of Wall 
Street," Hebert told EBW. 
"If anyone thinks we can turn this industry around and we can have adequate 
supply and we can have adequate deliverability without the confidence of Wall 
Street they are absolutely wrong. They haven't done their homework and they 
don't understand history." 
Hebert also touched in the most detail yet on the controversial article in 
"The New York Times" in which Hebert suggested that Enron Chairman Kenneth 
Lay had approached him to in effect offer a quid-pro-quo, Enron's support if 
he changed his views on electricity deregulation. 
For the complete interviews and the rest of the energy industry's most 
exciting new news service please see http://www.energybusinesswatch.com . For 
more information, call EBW subscriber services at 202-625-8328. 
MAKE YOUR OPINION COUNT - Click Here 

http://tbutton.prnewswire.com/prn/11690X25362155


/CONTACT: EnergyBusinessWatch subscriber services, 202-625-8328/ 14:03 EDT 
Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 

Natural Gas Project Decision Due Soon-Venezuelan Official

07/24/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

HOUSTON -(Dow Jones)- Venezuela should announce a decision in the next few 
days on developers for natural gas projects in the country, Ignacio Arcaya, 
ambassador of Venezuela to the United States, told a press briefing Tuesday 
morning. 
The natural gas project was one of the topics Arcaya addressed during the 
briefing. U.S. companies including Enron Corp. (ENE) and Exxon Mobil Corp. 
(XON) are competing for pieces of the project.
Venezuela has the largest gas reserves outside of the Middle East, he said. 
The country would like to tap those reserves for exports as well as for use 
internally. 
To do so, Venezuela needs to develop gas infrastructure as well as gas 
production. The country needs to expand its gas pipeline system and build 
facilities for liquefied natural gas exports. 
He also hopes that another Venezuelan energy export - orimulsion - will find 
buyers in the Untied States. A natural bitumen, orimulsion is a patented fuel 
designed for use in electric power generation. 
Florida power generators failed to get approval to use the fuel after a test 
program in the late 1980s and early 1990s. Another study of the fuel, 
conducted by the U.S. Environmental Protection Agency, won't be negative or 
positive for orimulsion, Arcaya said. 
He hopes that study will lead to orimulsion consumption in the U.S. A number 
of companies are interested in joint ventures to import the fuel into the 
United States. 
A study out of Tampa, Fla., says that orimulsion is less polluting than coal 
and could be used to generate 20% of that city's power, he said. 
The ambassador said he didn't know anything about reports of an emergency 
meeting of the Organization of Petroleum Exporting Countries to discuss 
production cuts. 
OPEC sources have reported that the cartel is discussing holding a meeting 
Aug. 6 or Aug. 14 to discuss cuts in response to lower crude oil prices. 
Venezuela doesn't want high oil prices because that hurts consumers, but low 
oil prices hurt producers, he said. 
The country now exports 60% of its crude oil production and 40% of its 
refined products output, Arcaya said. The plan is to reverse those figures. 
Part of that plan will include investments to increase output of refined 
products from Venezuelan refineries, he said. The increased output will meet 
U.S. environmental specifications for refined products. 
He reiterated Venezuela's plans to increase output of refined products at 
Citgo's Lake Charles, La., refinery by 100,000 barrels a day. He didn't know 
when that added output would be available. Citgo is owned by Petroleos de 
Venezuela SA, the Venezuelan state oil company. 
There continues to be much discussion in Venezuela about cutting back 
ownership of Citgo, Arcaya said. "But the figures show that Citgo is an 
excellent investment," he added. 
While in Houston, the ambassador will meet with official from several energy 
companies including Exxon Mobil, Texaco Inc. (TX) and Chevron Corp. (CHV). He 
will also meet with officials from Kellogg Brown & Root, a unit of oil 
services company Halliburton Co. (HAL) 
-By Michael Rieke, Dow Jones Newswires; 713-547-9207; 
michael.rieke@dowjones.com

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

USA: Black Hills signs deal for 273-MW Nevada power plant.

07/24/2001
Reuters English News Service
(C) Reuters Limited 2001.

RAPID CITY, S.D., July 24 (Reuters) - Black Hills Energy Capital Inc., the 
independent power unit of Black Hills Corp. , said Tuesday it signed a deal 
to buy a 273-megawatt power plant near Las Vegas, Nevada, from an Enron Corp. 
unit. 
The agreement, whose financial terms were not released, is expected to close 
in the third quarter of 2001, Rapid City, South Dakota-based Black Hills 
Energy said in a statement.
Enron North America, a wholly-owned subsidiary of Houston-based Enron, is 
adding 222 megawatts (MW) of natural gas-fired capacity to a 51-MW plant. 
Total output from the power plant will be enough to light about 273,000 
homes. 
The planned 222 MW of new capacity is expected to be phased in commercial 
operation in the third quarter of 2002, Black Hills said. 
Nearly all of the power from the 51-MW plant is under contract through 2024. 
The 222 MW have been sold under a 15-year contract, which requires the buyer 
to provide fuel for the power plant. 
Black Hills said the deal, along with other power plants it has in operation 
and under construction, would get the company to its goal of 1,000 megawatts 
of independent power by 2003.

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

German Energy Blue Chips E.On, RWE Return To Form
By Stephan Kueffner
Of DOW JONES NEWSWIRES

07/24/2001
Dow Jones International News
(Copyright (c) 2001, Dow Jones & Company, Inc.)

FRANKFURT -(Dow Jones)- It used to be the only reason to buy shares in 
utility companies was bad news in the tech market. 
However, a series of key deals and an improving bottom line in core 
operations have helped Germany's two blue-chip utility giants, E.On AG (EON) 
and RWE AG (G.RWE), make investors take note - though analysts are divided 
about which is the best investment.
Both companies have made quick strides since Germany's electricity market was 
deregulated in 1998 to focus on core operations and improve investor 
relations. 
The key deals in core markets include RWE's takeover of Thames Water last 
year, giving it a strong position in the high-margin water business, and 
E.On's takeover bid for Powergen Plc (PWG) earlier this year and last week's 
asset swap with British Petroleum (BP) that will give it close to 30% of 
Ruhrgas AG (G.RUH). 
They've also defended their home markets and their key power businesses are 
improving - as demonstrated by rising electricity prices. 
But it's taken the market time to take note. Investors were worried by 
tumbling electricity prices and lured to shares in tech companies. 
"Despite their age, for the market, (E.On and RWE) are new faces," said a 
utility analyst in Madrid. 
So who's ahead? Through its takeover of Thames Water, RWE leads E.On in 
expanding into the water business, "a business offering higher margins that's 
set to be a key industry of the 21st Century," he added. 
It has also proven it can cut the fat out of operations. When it released 
preliminary earnings figures in early July, RWE said its cost-cutting program 
brought EUR1 billion of savings over the past 12 months. It wants to reduce 
costs by an additional EUR1.55 billion per year through 2004. 
Though it released earnings data promptly after the end of its fiscal year, 
some were disappointed that except for sales, RWE failed to release operating 
and net profit figures beyond giving percentages to the general market, 
though it provided more detailed information to analysts at subsequent 
meetings. 
"We think RWE shows greater signs than E.On...of wanting to take the 
necessary steps to reveal the value of (shares) to the stock market," a 
Schroder Salomon Smith Barney report from July 11 said. 
E.On, however, will have a stronger position in the U.S. - where market 
consolidation lags well behind Europe - if it gets regulatory clearance for 
its takeover of Powergen Plc (PWG), analysts said. 
Above all, its deal to secure almost 30% of Germany's main gas importer and 
distributor Ruhrgas AG (G.RUH) by swapping Veba Oel for BP's 25.5% Ruhrgas 
stake could have major strategic implications for E.On as a player in 
European gas, they added. 
Full control of Ruhrgas would make E.On "the number two player in gas in 
Europe and the number one by far in Germany," said Matthias Heck at Sal. 
Oppenheim. 
In the short term, there will be no benefit to E.On's bottom line through 
getting a third of Ruhrgas, but some analysts said full control of Ruhrgas 
might not be far away - telecommunications group Vodafone Plc (VOD) and steel 
giant ThyssenKrupp AG (G.TKP) could be willing to sell their holdings. 
"Once that occurs, Shell and Exxon Mobil (XOM) are also likely to want to get 
out as (holding) a minority positions in E.On will be of little interest," an 
analyst in Frankfurt said. 
However, he added Germany's Federal Cartel Office would want the gas market 
to be deregulated more rigorously before it allows that to happen. 
"Besides the regulatory opposition, there are signs that other market 
entrants such as Enron Corp. (ENE) will make lower (gas) prices possible," a 
London-based analyst said. 
It will also be interesting to see how closely RWE and BASF AG (BF) gas unit 
Wingas GmbH cooperate in acquiring eastern European gas companies slated for 
privatization. 
"That could be the start of something greater," said the Madrid utility 
analyst. 
Non-Core Holdings Could Be Problem 
Looking past their core assets, he also said the market still worries about 
their diversification into non-core operations - a factor weighing on share 
prices until the market gets a better idea of what they're really worth. 
Both groups still have vast corporate holdings to dispose of once Germany's 
scrapping of windfall taxes on asset sales comes into effect in January. 
For E.On, the larger of the two, this means selling blue-chip Degussa AG 
(G.DGX), the world's largest specialty chemicals group, while RWE is looking 
to sell mid-cap units Hochtief AG (G.HOT), a construction group, and printing 
machine maker Heidelberger Druckmaschinen AG (G.HDB). 
Despite the value of their assets, analysts said both Degussa and Hochtief 
"will need major restructuring before the holdings can hope to sell them," 
the Madrid analyst said. "For some people, the size of the assets is a 
blessing, for others, a worry," he added. 
-By Stephan Kueffner, Dow Jones Newswires; +49 69 29 72 55 00; 
stephan.kueffner@dowjones.com

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

Black Hills To Buy Nev. Power Complex From Enron

07/24/2001
Dow Jones News Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

RAPID CITY, S.D. -(Dow Jones)- Black Hills Corp.'s (BKH) Black Hills Energy 
Capital Inc. signed a definitive agreement to purchase a 273 MW natural 
gas-fired power plant in North Las Vegas, Nev. from Enron North America, unit 
of Enron Corp. (ENE) for an undisclosed amount. 
In a press release Tuesday, Black Hills said it expects the deal to close in 
the third quarter of 2001.
An expansion of the present 51 MW co-generation plant is now underway. 
Construction of a new combined cycle generation facility adjacent to the 
existing plant will add about 222 MW of capacity to the existing plant site. 
The new generation is expected to be fully operational by the third quarter 
of 2002. 
As part of the transaction, Black Hills also secured long-term contracts for 
the output of the facility. 
Nearly all of the capacity and energy produced by the existing 51 MW plant is 
under contract through 2024, with the remainder being merchant power. 
The power of the planned 222 MW combined-cycle plant is sold under a 15-year 
contract. The contract requires the purchaser to provide fuel to the power 
plant when the plant is dispatched. 
New York Stock Exchange-listed shares of Black Hills recently traded at 
$40.38, down $2.32 or 5.4%. 
-Thomas Gryta; Dow Jones Newswires; 201-938-5400

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

INDIA: U.S. looks "beyond sanctions" at ties with India.

07/24/2001
Reuters English News Service
(C) Reuters Limited 2001.

NEW DELHI, July 24 (Reuters) - The United States reassured India on Tuesday 
that efforts were under way to scrap the economic sanctions it imposed in 
1998, but took a swipe at the country's "far from optimal" investment 
climate. 
Assistant Secretary of State on South Asian affairs Christina Rocca blended 
goodwill with criticism in her speech to business leaders in New Delhi on the 
future of a bilateral relationship which has blossomed despite India's 
nuclear tests of 1998.
She took India to task for protectionist trade policies, its investment 
climate and its failure to provide an effective system for the protection of 
intellectual property. 
But she had good news on the sanctions which Washington imposed on New Delhi 
after its nuclear tests, saying India had "a role and a responsibility to 
play in helping secure stable, peaceful conditions in South Asia and beyond". 
"In this connection, as I hardly need to tell you, a review on our sanctions 
policy is now under way." 
"And we will need to work closely with Congress to see how the current 
situation might be changed. Getting beyond sanctions would do much to deepen 
the bilateral relationship." 
A chorus of officials in the Bush administration have said in recent weeks 
that sanctions should be dropped - at least in the case of India if not 
Pakistan, which was also hit by sanctions after it responded to India with 
nuclear tests of its own. 
At her confirmation hearing in May, Rocca told the Senate that sanctions had, 
in her opinion, "outlived their usefulness". 
The sanctions prevent the sale to India and Pakistan of U.S. nuclear energy 
equipment, rocket motor technology, supercomputers and military equipment. 
They also restrict certain companies from doing business in the United 
States. 
CANDID ASSESSMENT 
Rocca said the Bush administration was committed to strengthening and 
intensifying relations with India, and noted that the past few years had seen 
"the beginning of a transformation" in ties with the world's largest 
democracy. 
"Now is the time to complete that transformation," she said. 
Rocca said non-proliferation remained an important goal of U.S. policy, but 
Washington wanted to broaden its engagement with India on defence to include 
potential areas of cooperation. 
The Clinton administration held several rounds of talks with New Delhi to 
reconcile its proliferation concerns with India's plans to build a "minimum 
nuclear deterrent". 
But the two sides, once on opposite sides of the Cold War, have moved closer 
since then and President George W. Bush won warm backing from New Delhi for 
his controversial nuclear vision. 
Rocca said the recent summit between India and Pakistan, which ended without 
even a joint statement because of differences over the Kashmir territorial 
dispute, was "a good first step". 
"...the serious and constructive atmosphere of these talks tell me that both 
sides are committed to resolving their differences, even if this turns out to 
be a lengthy process". 
Turning to India's decade-old drive for economic reform, Rocca had some 
polite criticism. 
"During the past 10 years, India has achieved considerable progress in 
liberalising its trade policy," she said. 
"But, in our candid assessment, the level of protectionism remains too high. 
This suits some vested interests, I suppose, but clearly impedes overall 
economic efficiency." 
She said the problems clouding India's "entire investment climate" could be 
summed up with a five-letter word, "Enron". 
U.S. energy giant Enron Corp has threatened to walk out of its $2.9-billion 
Indian Dhabol project due to a row with the authirities over payment defaults 
and high tariffs. 
"...I have to emphasise that it will be difficult for international investors 
to view India favourably until it is resolved, and in a reasonable manner," 
Rocca said.

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

BUSINESS
Allegheny Energy to split up Hagerstown utility to create company for power 
generation; Permission for IPO sought; Remaining company to distribute energy 
to retail customers
Dan Thanh Dang
SUN STAFF

07/24/2001
The Baltimore Sun
FINAL
1C
(Copyright 2001 @ The Baltimore Sun Company)

In a move that follows an industry trend, Allegheny Energy Inc. said 
yesterday that it will split itself into two companies next year - an 
unregulated power generating business that will sell electricity on the 
wholesale market, and a regulated distribution business that will sell energy 
to retail customers. 
The Hagerstown utility filed yesterday with the Securities and Exchange 
Commission seeking approval for an initial public offering of up to 18 
percent in the new, as yet to be named holding company.
The holding company will own 100 percent of Allegheny Energy's unregulated 
generating unit, Allegheny Energy Supply Co. LLC. 
Allegheny Energy also announced that it expects next year to distribute to 
its shareholders the remaining equity ownership in the new holding company in 
a tax-free distribution. 
The transaction will leave Allegheny Energy as a retail distributor of 
electricity and natural gas to about 3 million people in parts of Maryland, 
Ohio, Pennsylvania, Virginia and West Virginia. 
The initial public offering will need regulatory approvals, two of them from 
the Securities and Exchange Commission. 
The Hagerstown utility had $4 billion in revenue last year and employs 5,900 
nationwide, 533 of them in Maryland. Allegheny Energy Supply's new holding 
company also likely will have its headquarters in Hagerstown. 
Company officials said a decision has yet to be made on the headquarters site 
of the distribution business, which will retain the Allegheny Energy name. 
"We're positioning both companies to compete in the new energy marketplace," 
said Alan J. Noia, chairman, president and chief executive of Allegheny. "If 
you've been following the company, this is the next logical step." 
Shares of Allegheny fell $2.11 on the New York Stock Exchange yesterday to 
close at $42.65. 
The spinoff announcement comes on the heels of a similar plan announced in 
October by a Baltimore competitor, Constellation Energy Group Inc. 
But, instead of separating in one step like Constellation, Allegheny Energy 
hopes to first raise money by selling up to 18 percent of the common stock in 
the new holding company in an IPO expected in the fourth quarter. 
Allegheny said it will use the proceeds to pay down debt and invest in its 
building projects. 
The company is also considering a $1 billion leveraged lease of one of its 
power stations to finance the growth and development of its generation 
portfolio, officials said. 
Noia said the two companies will have different dividend policies, and more 
details will be established at the time of the stock offering. 
Noia also said that the merchant energy company is expected to grow about 20 
percent a year, while the delivery company will grow about 4 percent to 5 
percent. 
It is unclear whether Allegheny's spinoff will have to pass reviews by five 
state regulatory agencies. Gregory V. Carmean, executive director of the 
Maryland Public Service Commission, said: "You can expect us to follow the 
same path of examining their regulated utility's financial strength after the 
split as we have done with Constellation's separation plan." 
Yesterday, utility analysts praised the company for its timing despite the 
public relations and regulatory pounding some energy producers have received 
recently as a result of the California energy crisis. Energy stocks have also 
suffered recently because of greater supply and lower demand because of 
cooler weather. 
"The unregulated power producers have done quite well in recent years with 
the exception of this year, because of California," said Craig Shere, a 
Standard & Poor's analyst. "These stocks have been so beaten up over the 
issue of price caps and rebates, but there's very little substance behind it 
all. 
"It's not the greatest market right now, so if Allegheny had to do an IPO 
right now, I'd wait. But the market for this sector should not be bad for the 
fourth quarter. 
"At the end of the day, these companies will continue to post very strong 
earnings. Allegheny's done quite well because everyone's been expecting this 
to happen. This is, and will continue to be, a growth industry," Shere said. 
In the past couple of years, Allegheny has carefully completed each step 
toward making a spinoff possible. 
Allegheny began preparing for deregulation by transferring power plants from 
its regulated utility, Allegheny Power, to the unregulated generating 
business in 1996, starting with its plants in Pennsylvania. 
Allegheny Power still owns power plants in West Virginia, which has only 
partially deregulated the electric industry, but Noia said those remaining 
2,000 megawatts will be transferred to Allegheny Energy Supply before the 
separation takes place. 
In order to meet the electricity needs of customers in each state, Noia said 
the regulated utility has a number of long-term contracts with its 
unregulated supply affiliate to buy back power, the last of which ends in 
2008. 
As part of the plan to split, Allegheny also launched an aggressive $1 
billion plan to purchase and build power plants across the country. 
Allegheny Energy Supply is building power plants in Arizona, Indiana and 
Pennsylvania. The company also acquired 83 megawatts of coal-fired generation 
in Pennsylvania and three power plants in the Midwest from Enron Corp. in 
May. 
By 2005, Allegheny Energy Supply is expected to own or control about 14,500 
megawatts of energy, which is enough to provide electricity to about 14.5 
million homes. 
To trade in electricity, natural gas and other fuels, Allegheny paid $490 
million in March for Merrill Lynch & Co.'s Global Energy Markets, an energy 
trading unit that was renamed Allegheny Energy Global Markets.

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


FERC Should Oversee All Utilities, Lawmaker Says (Update1)
2001-07-24 17:05 (New York)

FERC Should Oversee All Utilities, Lawmaker Says (Update1)

     (Adds that energy department, FERC officials will testify
before the committee in 16th paragraph.)

     Washington, July 24 (Bloomberg) -- The U.S. government agency
that regulates interstate electricity prices should get expanded
authority to oversee all public and cooperative power utilities,
the chairman of the Senate's energy panel said.
     The Federal Energy Regulatory Commission approves wholesale
interstate electricity rates for investor-owned utilities and
power sellers, such as Enron Corp. The proposal from Senator Jeff
Bingaman would add to the FERC's jurisdiction federal utilities
such as Tennessee Valley Authority, rural electricity cooperatives
and public power utilities.
     Extending FERC's power will help deregulate electricity
markets so that new generating companies can compete against
utilities, Bingaman said.
     ``To leave a legislative solution for another day would be to
ensure the problems faced now in California and the West will be
replicated across the country,'' the New Mexico Democrat said.
     Bingaman's panel next week will begin debating legislation to
address conservation, natural gas drilling and other energy
issues. It may include electricity deregulation, he said.
     The proposal may help make it easier for private companies
compete against public utilities that traditionally have had
monopolies in many regional markets, one analyst said.
     ``There may be merit to this,'' said Pietro Nivola, a senior
fellow at the Brookings Institution, a Washington-based policy
group. The plan may ``ensure that markets are operating freely.''

                           Rate Setting

     Any move to boost FERC's power to enforce ``just and
reasonable'' wholesale rates, though, would be unwise, he said.
     ``They should cease worrying about if the prices are fair and
make the market more competitive,'' Nivola said.
     Last month, the FERC set limits on the wholesale prices for
energy in California after lawmakers, including Bingaman,
criticized the agency for not intervening earlier to help the
state as it faced power shortages and rising prices.
     Critics of the price limits such as Senator Frank Murkowski
of Alaska, the senior Republican on the energy committee, have
said they will discourage companies from building generators in
California because of fears that the caps will cut into profits.
     California in 1996 deregulated its wholesale electricity
market and allowed prices to fluctuate based on supply and demand.
Rising electricity use, a lack of new power plants and low
rainfall that hurt hydroelectric facilities drove up prices last
year, leaving California's two largest utilities insolvent with
almost $14 billion in debt. The state began buying power on their
behalf in January and has spent almost $8 billion.
     Under the Bingaman proposal, utilities would set rates,
overseen by FERC to make sure they are comparable to the rates
utilities charge themselves. The agency also would get authority
over rates charged for power within states, not just interstate
transmissions.
     The plan would let FERC force utilities to team up in
regional organizations to better manage their power grids.
Currently, some transmission system management is handled state-by-
state.
     FERC also would aid in approving sites for transmission lines
with input from regional governments, under Bingaman's proposal.
States now control the location of the lines.
     Francis Blake, the deputy energy secretary, will testify
before the committee tomorrow on the Bingaman plan. The five FERC
commissioners, including Chairman Curt Hebert, will discuss the
plan before the panel on Thursday.




Energy Generators Fall With Gas, Electricity Prices (Update1)
2001-07-24 16:36 (New York)

Energy Generators Fall With Gas, Electricity Prices (Update1)

     (Updates with closing share prices in second and third
paragraphs and analyst comment in eighth paragraph.)

     New York, July 24 (Bloomberg) -- Shares of El Paso Corp.,
Williams Cos., NRG Energy Inc. and other energy producers and
natural-gas suppliers tumbled because of falling gas and
electricity prices, analysts said.
     Speculation the U.S. Federal Energy Regulatory Commission is
ready to toughen rules on business between pipeline companies and
trading affiliates also drove shares lower, analysts said.
     Shares of El Paso, owner of the largest U.S. interstate
pipeline network, fell $4.26, or 8.2 percent, to $47.64. Earlier,
they touched $47.20, a 52-week low. Enron Corp., the biggest
energy trader, fell $3.42, or 7.3 percent, to $43.24. It touched a
52-week low of $42.
     Williams Cos., a pipeline company and trader, fell $2.07, or
6.4 percent, to $30.28. Calpine Corp. fell $4.25, or 11 percent,
to $33.90. NRG fell $2.35, or 11 percent, to $19.15. Earlier, it
touched a 52-week low of $18.40.
     Salomon Smith Barney Inc. analyst Ray Niles cut his ratings
on several energy generators because lower power and gas prices
probably will hurt third-quarter earnings.
     The average price of electricity in California so far this
month had fallen 41 percent from a year ago, partly because new
generators have opened. Gas on the New York Mercantile Exchange
fell today to $2.97 per million British thermal units. That's down
from around $10 per million British thermal units in late
December.
     FERC has been investigating whether El Paso held back
pipeline capacity in California to drive gas price higher. FERC
might issue new rules on affiliate business this week, Dow Jones
Newswires has reported.
     ``There's concern about what FERC might come out with
tomorrow,'' Merrill Lynch analyst Donato Eassey said. ``(It is) a
combination of a lot of issues.''
     He cited the pipeline affiliates' code-of-conduct rules and
the dispute over refunds to California by power generators.
     Tamara Young-Allen, a FERC spokeswoman, couldn't confirm
whether the commission would discuss new rules at its meeting
tomorrow. Tomorrow's agenda includes standards of conduct for
transmission providers. Allen declined to say whether the rule
would deal directly with company affiliates.

--Mark Johnson in the Princeton newsroom, (609) 279-4017 or
mjohnson7@bloomberg.net, and Mark Jaffe in Washington with
reporting by Margot Habiby in Dallas, through the Princeton
newsroom, (609) 279-4000/pjm



Black Hills to Purchase Generation Complex From Enron (Update1)
2001-07-24 16:20 (New York)

Black Hills to Purchase Generation Complex From Enron (Update1)

     (Updates with closing stock activity in fourth paragraph.)

     Rapid City, South Dakota, July 24 (Bloomberg) -- Black Hills
Corp., a utility owner that primarily operates in the western
U.S., agreed to buy Enron Corp.'s power-generation complex in
North Las Vegas, Nevada, for an undisclosed price.
     The purchase will eventually add 273 megawatts of power to
Black Hills Energy Capital, Black Hills' independent power unit,
the company said in a statement. The acquisition should be
completed during the third quarter, the company said.
     Black Hill plans to add a plant adjacent to the current 51-
megawatt Enron North America site. The new combined-cycle
generation site, which would have an output of 222 megawatts, is
expected to begin operating in the third quarter of 2002 and boost
Black Hills Energy's total output to 1,000 megawatts.
     Shares of Rapid City, South Dakota-based Black Hills fell
$2.56, or 6 percent, to $40.14. Houston-based Enron, the largest
energy trader, fell $3.42, or 7 percent, to $43.24.



Dan Walters: Blame game over California's energy crisis will continue for 
years

Sacramento Bee
(Published July 24, 2001) 
The wrestling match between politicians and Enron Corp. moved into a more 
intense arena over the weekend when a state Senate investigating committee 
sought contempt penalties because the huge energy company has refused to turn 
over internal documents. 
Although Houston-based Enron owns no major power plants in California, it has 
adopted the toughest stance of all energy companies against the multiple 
investigations of why wholesale energy prices spiked so high. And it has 
become, in turn, a whipping boy for California politicians. 
At one point last spring, state Attorney General Bill Lockyer said he wanted 
criminal charges against Enron and its chairman, Kenneth Lay. "I would love 
to personally escort Lay to an 8-by-10 cell that he could share with a 
tattooed dude who says, 'Hi, my name is Spike, honey,' " Lockyer said. With 
less colorful language, Gov. Gray Davis has often castigated Texas-based 
companies as price gougers -- even though Texas firms have been fairly minor 
suppliers to California. 
Some of it is just buzzword politics. Lockyer and Davis know that 
Californians dislike anything associated with Texas, and Lay has been one of 
President Bush's major political supporters. Enron, meanwhile, cites the 
rhetoric as evidence that Lockyer, Davis and legislative investigators are 
interested less in finding the truth than in seeking scapegoats. Enron also 
filed a lawsuit challenging the legality of the Senate's subpoenas of trading 
data. 
Most other energy companies have complied with the demands, creating 
Sacramento repositories of the data under elaborate confidentiality 
agreements worked out with the special Senate committee headed by Sen. Joseph 
Dunn, D-Santa Ana. But Enron has refused, and on Saturday, Dunn submitted a 
report asking the Senate for "an appropriate coercive sanction." 
Does Enron have something to hide? Or does it sincerely believe that what's 
happening in California is political scapegoating? Are the companies' fears 
about the confidentiality of the data sought by the Senate justified? Would 
data be selectively leaked to show the firms in the worst light? Would data 
be used by competitors? Or could the information find its way into the hands 
of class-action attorneys? 
Dunn, a prominent trial attorney himself, insists that confidentiality will 
be protected and that the information being sought is only for legislative 
purposes. But Enron and the other companies have some reason to be wary of 
turning over confidential information to politicians. Similar information was 
leaked -- without penalty -- in last year's investigation of former state 
Insurance Commissioner Chuck Quackenbush. And there are indications that 
private lawyers are working closely with investigators. 
Mike Aguirre, the San Diego attorney seeking a "smoking gun" to prove 
collusion among energy companies, supplied Dunn's committee with a few 
dissident Duke Energy workers who alleged, in highly publicized hearings, 
that the firm had manipulated production at its San Diego plant to create 
artificial shortages and drive up spot market power prices. Duke then refuted 
the charges by releasing some excerpts from the records of the Independent 
System Operator, the controller of California's power grid, indicating that 
ISO had ordered the plant operational changes. 
Aguirre subsequently asked the governor's office to pressure the ISO -- now 
under Davis' direct control -- to release all of the Duke-related documents 
that would show, he says, that the firm actually manipulated the situation. 
Duke and other companies insist that the ISO-held documents are proprietary. 
Aguirre pleaded with one Davis adviser in an e-mail that "we need your help 
in properly getting this information out." But Aguirre, in an interview, said 
he had not yet obtained cooperation from Davis aides. 
The political and legal struggle to affix blame for California's energy woes 
will continue for months, perhaps years. The crisis will cost ratepayers at 
least $50 billion, and they'll want to know why as they make out their 
utility bill checks.