The Fortune article is out.  Classic Bethany McClean.  It sucks, as we expected.
 -----Original Message-----
From: 	Schmidt, Ann M.  
Sent:	Thursday, September 06, 2001 7:59 AM
Subject:	Enron Mentions

Enron's Power Crisis
Fortune Magazine, 09/17/01

Enron Offers to Complete Indian Power Plant If Govt Backs Sale
Bloomberg, 09/06/01

INDIA PRESS: Enron Proposes 3-Stage Sale Of Dabhol Stake
Dow Jones International News, 09/06/01
More companies looking to hedge their exposure to volatile energy prices
Associated Press Newswires, 09/06/01
Enron still plans sale of Portland General
Houston Chronicle, 09/06/01
Power regulators still debating decisions on key energy issues
Associated Press Newswires, 09/05/01




First/Energy
Enron's Power Crisis
Bethany McLean

09/17/2001
Fortune Magazine
Time Inc.
48
(Copyright 2001)

"Bizarre" is how everyone describes it. On Aug. 14, Enron CEO Jeff Skilling--a self-described "brilliant" 47-year-old who says he's never suffered any kind of failure--announced he was relinquishing his title and leaving the company after a mere six months in the top job. Skilling insisted that the parting was voluntary, laying the blame on unspecified personal, non-health-related reasons. But by leaving when and how he did, Skilling forfeited a roughly $20 million severance package and gained the responsibility of repaying a $2 million loan that Enron would have forgiven had he stuck around until the end of the year. 
More bizarre than his timing is how quickly Enron's once tight relationship with Wall Street deteriorated during Skilling's reign. The ex-CEO was famously boastful--insisting that Enron's nascent broadband trading business was worth $35 billion--and thin-skinned, declaring on a conference call that a money manager who dared ask for a balance sheet was an "asshole."
The task of restoring Enron's glory falls to Ken Lay, the company's chairman and former CEO, who has replaced Skilling. He's got his work cut out. Enron's "overall quality of earnings has deteriorated, its level of behind-the-scenes financial engineering has increased, and its overall standing with the Street has plunged," wrote UBS Warburg analyst Ron Barone in a recent report--and Barone is one of the bulls. Despite Lay's insistence that there aren't any "accounting issues, trading issues, or reserve issues" at Enron, investors are hesitant to bid the company back up. Indeed, Enron now trades at around $38, down some 60% from its 52-week high. 
One reason Lay's job is so tough is that, as FORTUNE pointed out in March (see "Is Enron Overpriced?" on fortune.com), Enron's financials are on the dim side of opaque. While Wall Street was once willing to take the company's word on financial performance, it no longer is. And because Enron gives analysts so little to work with, building independent models is next to impossible. Enron's major business, the trading and marketing of energy, is relatively new and extremely complicated. Seemingly basic questions--like the effects of lower natural gas prices and less volatility in the energy markets on Enron's profits--are still unanswered. And there's confusion about the relationship between Enron's reported earnings, which reflect changes in the value of its energy-trading portfolio, and the actual cash coming in. In the first half of the year, Enron reported net income of $810 million and cash flow from operations of negative $1.3 billion. 
Then there's the challenge of convincing investors that Enron itself believes it has a rosy future. High-level executives besides Skilling have recently left, and analysts like Jeff Dietert at Simmons say insider selling has been "aggressive" recently. While Enron executives still hold big chunks of stock, according to Thomson Financial/Lancer Analytics, insiders have sold 1.75 million shares in 2001--and they've sold as the stock has fallen, which is generally regarded as a bad sign. Among the biggest sellers: Lay, who has sold 408,000 shares at prices ranging from $81 last winter to $43 in July. Other sellers have included two executives who have since resigned: new business unit head Lou Pai and broadband chief Kenneth Rice. Enron says that sales are related to the pending expiration of options. 
Lay is moving swiftly to address those concerns. He's promised the Street more disclosure about Enron's operations, and to combat criticism about Enron's weak bench he recently announced a new office of the chairman, anointing veterans Greg Whalley and Mark Frevert to help him run the company. No word yet on whether he plans to start buying Enron stock. 
Quote: Wall Street will no longer take the company's word on financial performance.

COLOR PHOTO: BRAD HINES Why did Skilling quit? Mum's the word. 
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	


Enron Offers to Complete Indian Power Plant If Govt Backs Sale
2001-09-06 03:15 (New York)

Enron Offers to Complete Indian Power Plant If Govt Backs Sale

     Mumbai, Sept. 6 (Bloomberg) -- Enron Corp. said it will
finish building a $3 billion power plant in India if the
government backs a plan by the biggest energy trader to sell its
majority stake in the unprofitable venture to local banks.

     Work stopped in June on the second construction phase of the
power station in Maharashtra state because the plant's sole
customer, the state electricity board, owes $64 million in unpaid
bills and ceased buying power in May. The expansion, which is 95
percent complete, would add 1,444 megawatts of capacity.

     Enron offered to sell its 65 percent stake in Dabhol Power
Co., the plant's owner, in three tranches to local banks that
helped finance the project, Business Standard reported, citing a
letter to India's Prime Minister Atal Behari Vajpayee from Enron.

     ``We are willing to complete the project at cost should they
(government) proceed with our plan,'' said Jimmy Mogal, a
spokesman for Dabhol Power Co., Enron's local unit.

     Enron would sell 40 percent of its shares in Dabhol once
negotiations with construction operators to finish the work begin.
It would sell a further 50 percent of its stake once construction
restarts in April 2002. The rest would be sold when the project is
completed by January 2003, the paper said.

     Contractors stopped work on the expansion in June because
they hadn't been paid since April.

    Indian banks loaned $1.4 billion to Dabhol without government
guarantees on the loans. The $600 million lent by ABN Amro, Bank
of America Corp. and other overseas banks is covered by government
guarantees.

     Indian lenders would have to disburse about $320 million for
completion of project, which includes construction of a 5 million-
ton liquefied natural gas import and storage facility.



INDIA PRESS: Enron Proposes 3-Stage Sale Of Dabhol Stake

09/06/2001
Dow Jones International News
(Copyright (c) 2001, Dow Jones & Company, Inc.)

NEW DELHI -(Dow Jones)- Enron Corp. (ENE) is proposing to sell the foreign equity in India's Dabhol Power Co. to Indian financial institutions through a three-part payment structure extending until Jan. 1, 2003, reports the Business Standard. 
Enron holds a 65.86% stake in DPC, the Maharashtra State Electricity Board, or MSEB, holds 14.14%, and Bechtel Corp. (X.BTL) and General Electric Co. (GE) each hold 10%.
Dabhol is a 2,184-megawatt power project in the western Indian state of Mahrashtra. 
Enron wants to sell its equity in DPC following payment disputes with its sole buyer, MSEB, and the federal government's failure to honor its counterguarantee. 
DPC's 1,444-megawatt phase II is about 95% complete. Its construction was abandoned by the contractor because of DPC's inability to pay. 
Under the structure, Enron has asked for initial payment of 40% of the purchase price of the entire foreign equity at the start of renegotiations between potential buyers and construction operators. 
The second installment of 50% has to be paid at the resumption of construction of the second phase of the project, or by April 1, 2002, whichever is earlier. The third and final installment of 10% has to be paid at the time of mechanical completion of the 2,144-MW power plant and regassification facility, or by Jan. 1, 2003, whichever is earlier, the report says. 
In a proposal submitted to Prime Minister Atal Bihari Vajpayee, Enron has said in the event the federal government doesn't directly purchase the foreign equity, it should guarantee the payment obligation in full. 
The $2.9 billion Dabhol project has an equity component of $1 billion, with foreign players, including Enron, contributing $858.6 million. India's financial institutions have a total exposure of over 60 billion rupees ($1=INR47.16), the report says. 
The Indian financial institutions, currently preparing a plan for the project's early revival, are considering Enron's proposal, the report said. 
Web site: http://www.business-standard.com 

-By Himendra Kumar; Dow Jones Newswires; 91-11-461-9426; himendra.kumar@dowjones.com

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

More companies looking to hedge their exposure to volatile energy prices
By BRAD FOSS
AP Business Writer

09/06/2001
Associated Press Newswires
Copyright 2001. The Associated Press. All Rights Reserved.

ATLANTIC CITY, N.J. (AP) - Harrah's Entertainment Inc. is willing to bet on many things. The cost of energy isn't one of them. 
Stung by high electricity and natural gas prices last year, Harrah's is not taking any more chances when it comes to buying the power to keep its casino on the New Jersey shore as bright and noisy as the nearby boardwalk and as cool as an Atlantic breeze.
The company has since locked in long-term supply contracts at fixed prices with Houston-based Enron Corp., joining the growing legion of hotels, manufacturers, retailers and technology firms behaving more like utilities in terms of hedging their exposure to volatile energy prices. 
In January, Harrah's Atlantic City - 86,000 square feet of casino space and more than 1,100 hotel rooms - rang up a natural gas bill that topped $220,000, nearly quadruple what it normally pays during a winter month. 
Under the 7-year deal with Enron, Harrah's agreed to pay roughly $5 per 1,000 cubic feet for a certain amount of natural gas. 
"We wanted to put ourselves in a position where we could even the playing field and not worry about those price spikes," said Stuart Thomas, who oversees energy procurement at Harrah's. 
Last winter, the retail price soared above $10 per 1,000 cubic feet in many parts of the country, and as high as $19 per 1,000 cubic feet in New Jersey. 
At $5 per 1,000 cubic feet, Harrah's natural gas bill last January would have been closer to $60,000. 
While Harrah's will be buffered from the worst-case scenario next January, the company could miss out on some savings if natural gas prices dip below what they've agreed to pay Enron. Harrah's executives said that is a tradeoff they will accept. 
"We didn't do it to save money," said Thomas, emphasizing that Harrah's $40 million-a-year energy bill is a tiny fraction of its overall costs. "We did it to manage risk." 
Harrah's is not alone. Eli Lilly & Co., IBM Corp., Kraft Foods Inc., Saks Inc. and Solvay Polymers Inc. are just some of the companies that have energy management deals with Enron, Duke Energy Corp. and Reliant Resources Inc. 
Enron's energy services unit is head and shoulders above its closest rival in this emerging field, signing $40 billion in contracts since it was created in 1997. After $200 million in losses since 1998, it recorded its first profits of $100 million in profit in the first half of 2001. 
Jeremy Blachman, the division's chief operating officer, attributes the success to the breadth of its portfolio, which includes deals with food and beverage giant Quaker Oats Co. and the Archdiocese of Chicago, which signed a seven-year agreement worth nearly $250 million. 
"Over the last couple of years, and particularly the last 6 to 9 months, we have seen our business go across markets," Blachman said. 
A.G. Edwards & Sons analyst Mike Heim said Enron's energy services unit, which is essentially a seller of electricity and natural gas at retail prices, remains but "a blip" within Enron, which gets 80 percent of its profit from wholesale marketing and trading. 
But if power and natural gas prices remain volatile, "it has the potential to become 10 to 20 percent of their business down the line," Heim said. 
Makers of chemicals, fertilizer, glass and steel - some of the most energy-intensive industries in the United States - were hit the hardest in the past 18 months as natural gas and electricity soared to prices never seen before. 
Companies that were not protected with long-term contracts took it in the neck, said P.J. Juvekar, a senior chemicals analyst at Salomon Smith Barney. 
After Dow Chemical Co., which was protected, completed its purchase of Union Carbide Corp., which wasn't, Dow was hit with a first-quarter loss of $685 million, compared with a profit of $512 million a year earlier. 
"Most of the disappointment came from the Carbide side, where they were fully exposed to $10 (per 1,000 cubic feet) natural gas prices without any hedges," Juvekar said. 
Companies that were protected from last year's energy spikes recognized earlier on that "we didn't feel as comfortable as the market deregulated," said Michael Thaman, chief financial officer of fiberglass giant Owens Corning, which needs massive quantities of natural gas and electricity to melt billions of pounds of glass each year. 
"We certainly don't have any illusions about our ability to beat the market," said Thaman, whose company signed a 10-year contract with Enron worth $1 billion. 
In the case of Harrah's, the most important thing was to rein in energy costs without skimping on amenities at the casino or hotel, said Bill Simpson, facilities manager at the Atlantic City property. 
Shutting down unused slot machines - 3,500 are on at all times - or adjusting the casino floor thermostat - set at a constant 70 degrees - were never considered last winter even as natural gas and electricity prices soared to record levels. Neither was passing along the costs to hotel guests by adding an energy surcharge on their bills, a strategy pursued by many hotel companies.

With AP Photo NY827 
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Sept. 6, 2001, 12:31AM
Briefs: City and state 
Enron still plans sale of Portland General
NEW YORK -- Enron Corp. said Wednesday it still plans to sell its Portland General utility in Oregon. 
Enron has been trying to sell the utility for more than a year. A $3.1 billion sale to Sierra Pacific Resources collapsed in April because the California power crisis made it too difficult to win approval, the companies had said. 
Enron is "getting close to another transaction" involving Portland General, Chairman and Chief Executive Kenneth Lay said at a Lehman Bros. energy conference in New York. 


Power regulators still debating decisions on key energy issues
By KAREN GAUDETTE
Associated Press Writer

09/05/2001
Associated Press Newswires
Copyright 2001. The Associated Press. All Rights Reserved.

SAN FRANCISCO (AP) - State power regulators were poised Thursday to suspend direct access, the option that allows Californians to choose their electricity provider. 
Though a mere 200,000 Californians switched from their local utility to companies such as Green Mountain Energy or Enron, the Legislature has ordered the Public Utilities Commission to temporarily end consumer choice to keep three struggling utilities from losing more customers.
Pacific Gas and Electric Co., Southern California Edison Co. and San Diego Gas and Electric Co. are each are on the hook for the more than $9.5 billion the state spent buying electricity on their customers' behalf this year. 
The PUC is expected to suspend direct access retroactively to July 1. Energy service providers, such as solar and wind-powered electricity seller Green Mountain Energy, say it's unconstitutional, and have vowed to fight the PUC in court. 
Likely to be missing from Thursday's meeting are several key issues that would affect Californians' electric bills: 
- A proposal to grant the state's power-buying agency the authority to raise electric rates on its own without PUC review to ensure such rates are justified. 
- A proposal to raise rates for San Diego Gas and Electric Co. residential customers by an average of 12 percent. 
- A proposal that bills Pacific Gas and Electric Co. $6.5 billion, Southern California Edison Co. $4 billion and SDG&E $1.5 billion to help the state recoup its power-buying costs. 
PUC President Loretta Lynch said the commission needs more time to review a flood of comments from utilities, consumer advocates and other parties to those decisions. 
The state plans to recover some of the money it has spent buying power by collecting a portion of ratepayer money. 
The more ratepayers each utility has, the lighter the blow to each customer's electric bill. But it would come at the expense of consumer choice, which lawmakers had promoted as the method by which deregulation would foster competition and lead to lower electric rates. 
Rick Counihan, vice president and general manager of Green Mountain Energy, said if the PUC suspends consumer choice until the state stops buying power for the utilities - potentially a decade down the road - consumer choice is dead. 
"(Direct access) was one of the few good things that came out of the restructuring," Counihan said. 
Just as some environmentally conscious customers buy organic produce or recycled paper products, the option to leave their utility and buy power largely generated by the wind or sun was another way they could make a difference, he said. 
Under the PUC plan, customers who signed up with an energy provider before July 1 could keep their contracts until they expire. Deals signed after that date would be nullified, and the customer would be forced to return to a local utility. 
PUC Commissioner Richard Bilas, a vocal proponent of direct access, is hopeful it could resume after the finances of PG&E, Edison and SDG&E improve. 
"When the utilities get back in the business - if they ever get back in the business of going out and buying electricity on behalf of themselves - that could open up direct access again," Bilas said. He predicted that could happen 18 months from now. 
Counihan was less optimistic. 
"I'm very skeptical that we, or other providers, will come back to California," Counihan said. "We'll very likely take our marketing activities and reallocate to other states that are more friendly." 
Counihan also worried a temporary suspension would give the big three utilities no incentive to retain an infrastructure of computers and other technology put into place to process customers who switched to the alternative energy firms. 
--- 
On the Net: 
http://www.cpuc.ca.gov

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