USA: Northwest preparing $1.8 bln offer for Portland.
Reuters English News Service, 10/05/01
Energy Security Concerns On Congressional Front Burner
Dow Jones Energy Service, 10/05/01
USA: CORRECTED - Future of US power grid at stake in Supreme Court case.
Reuters English News Service, 10/05/01
BRAZIL: Brazil readies guarantees for electricity sales.
Reuters English News Service, 10/05/01
Brazil To Guarantee Contracts In Wholesale Power Market
Dow Jones International News, 10/05/01
USA: UPDATE 1-Northwest Natural in talks to buy Portland GE.
Reuters English News Service, 10/05/01

Enron in Talks to Sell Portland General to Northwest (Update6)
Bloomberg, 10/05/01






USA: Northwest preparing $1.8 bln offer for Portland.

10/05/2001
Reuters English News Service
(C) Reuters Limited 2001.

NEW YORK, Oct 5 (Reuters) - Northwest Natural Gas Co is in the final stages to make an offer of $1.8 billion to buy Portland General Electric Co from Enron Corp in a deal that would bring the two Oregon-based utilities together, sources familiar with the situation said. 
They told Reuters that Northwest was offering a mixture of cash and stock and would also take on an additional $1.0 billion of debt, stamping an enterprise value of $2.8 billion on the assets.
The board of Northwest was still to vote on the deal but sources said the deal could be announced as early on Monday.

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

Energy Security Concerns On Congressional Front Burner
By Bryan Lee

10/05/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

OF DOW JONES NEWSWIRES 

WASHINGTON -(Dow Jones)- Congressional passage of energy policy legislation is unlikely to happen this year as energy infrastructure security has jumped to the forefront as a priority concern after Sept. 11, according to key House and Senate lawmakers.
"I'm not sure there'll be a bill this year," said Sen. Jeff Bingaman, D-N.M., chairman of the Senate Energy and Natural Resources Committee. 
It will be too difficult to reach agreement on the issues involved in passing a comprehensive energy policy bill and still get the measure through conference committee and to the president's desk before Congress adjourns this fall, Bingaman told an industry-sponsored forum this week. 
Bingaman has slated a hearing on energy infrastructure security for Tuesday, and plans to move legislation on the subject separately from the energy-policy bill. In advance of next week's hearing, Bingaman has solicited comments from leading energy industry groups. 
"The priorities have changed since Sept. 11," said Rep. Joe Barton, R-Texas, chairman of the House Energy and Air Quality Subcommittee. "The energy security issue is now paramount," he said. 
Barton announced this week that he wouldn't launch a campaign next year for the Senate seat being vacated by Phil Gramm, R-Texas. The decision stemmed in part from a desire to stay at the House Energy and Commerce Committee panel he chairs to work on energy infrastructure concerns. 
Congress will pass energy-policy legislation next year and focus on energy infrastructure security this year, Barton said, citing the threat to power plants, transmission lines, and natural gas and oil pipelines. 
The two legislators spoke at an energy forum this week sponsored by Enron Corp. (ENE), entitled "Energy Policy at a Crossroads." 
The priority on infrastructure security was applauded by John M. Derrick, Jr., chairman and chief executive of Potomac Electric Power Co. (POM). 
"We in the industry are concerned about an energy hit on our infrastructure," Derrick told the two lawmakers. 
That concern is well-founded, according to James R. Schlesinger, who in past administrations headed the departments of energy and defense, and the Central Intelligence Agency. 
"Our electric power grid is particularly vulnerable," Schlesinger said, particularly citing the threat from "information warfare." 
Schlesinger's warning was borne out the week after Sept. 11. The North American Electric Reliability Council, the industry group that coordinates power-grid reliability, reported last month its telephones and other communications were temporarily knocked out during a flurry of computer virus attacks. 
With the onset of increasing wholesale power market competition, the U.S. power grid is operating at a much higher capacity than ever before, making it vulnerable to physical or electronic attack, said Schlesinger. 
This risk has been compounded since competition has "weakened the incentive" for utilities to make needed investment in transmission infrastructure, Schlesinger said. 
House Panel Acts On Nuclear Security 

While Bingaman's committee prepares to tackle the issue beginning next week, the House Energy and Commerce Committee took a first stab at the issue this week. 
On Wednesday, as part of a package of three antiterrorism bills, the panel adopted legislation making sabotage at a nuclear power facility a federal crime and authorizing plant security guards to carry weapons and make arrests. 
The committee adopted an amendment sponsored by Rep. Edward Markey, D-Mass., requiring the U.S. Nuclear Regulatory Commission to undertake a comprehensive rulemaking to revise its power-plant security regime. 
"As terrible as the attacks of Sept. 11 were, a successful terrorist assault on a nuclear power plant could result in a full-scale nuclear core meltdown and breach of containment that could result in countless more deaths and injuries," said Markey, who opposes nuclear power. 
The NRC previously announced it is undertaking a top-to-bottom review of its security requirements in light of the Sept. 11 attacks. "As decisions are made, they will be implemented," said NRC spokesman William Beecher, who otherwise declined to comment on the House action, which is under review by the agency. 
The Nuclear Energy Institute, the industry's trade group, criticized the House action as a rash response to the Sept. 11 attacks. Nuclear power plant security issues should be addressed as part of an overall effort to secure U.S. energy infrastructure, NEI said. 
"We believe the security issue has to be addressed in a comprehensive and thoughtful way. That wasn't done Wednesday," said John Kane, NEI's vice president for governmental affairs. 
Kane also called for Congress to firmly delineate the responsibilities of the federal government and industry in securing nuclear power plants against attack. It isn't appropriate for private industry to respond to threats from enemies of state, he said. 
Bingaman, the Senate chairman, said Wednesday that, while he supports federalizing airport security, he believes that nuclear power plant defenses should remain the responsibility of the industry. 
-By Bryan Lee, Dow Jones Newswires; 202-862-6647; Bryan.Lee@dowjones.com

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

USA: CORRECTED - Future of US power grid at stake in Supreme Court case.

10/05/2001
Reuters English News Service
(C) Reuters Limited 2001.

In Oct. 3 WASHINGTON story headlined "Future of US power 
grid at stake in Supreme Court case" .... please read in
paragraph 9.... Industry lobbying group Electric Power Supply 
Association filed court briefs supporting Enron's position, 
while Edison Electric Institute filed in support of FERC ... 
instead of ... Industry lobbying groups Edison Electric 
Institute and Electric Power Supply Association filed court 
briefs supporting Enron's position ... (corrects Edison's 
position). 
A corrected repetition follows. 
By Chris Baltimore 
WASHINGTON, Oct 3 (Reuters) - With billions of dollars at stake in the electricity market, lawyers for Enron Corp urged the U.S. Supreme Court on Wednesday to uphold federal regulators' obligation to drive open competition on the nation's transmission grid. 
The nation's highest court heard oral arguments in the case which could have sweeping implications for the $220 billion U.S. electricity market. 
The Supreme Court's ruling could either open the U.S. transmission grid to retail competition, or limit open markets to just the wholesale realm. 
A decision is expected later this year or early in 2002. 
"It's billions and billions of dollars at stake" for energy firms, said an industry source. "A ruling could expand existing open wholesale markets to the retail level." 
The case is on appeal from the U.S. Appeals Court for the District of Columbia, which upheld FERC's authority to regulate state transmission in a June 2000 ruling. 
NEW YORK SAYS FERC WENT TOO FAR 
Enron - the largest U.S. wholesale power player and an ardent proponent of open markets and nationwide deregulation - argued the Federal Energy Regulatory Commission should have authority to force competition of all transmission assets. 
FERC should expand its authority beyond wholesale markets and states that have deregulated retail markets, Enron says. 
"You need a set of rules of the road that apply to everybody," said Enron attorney Louis Cohen. Industry lobbying group Electric Power Supply Association filed court briefs supporting Enron's position, while Edison Electric Institute filed in support of FERC. 
Meanwhile, in a separate companion case, the state of New York argued FERC went too far in regulating flows of electricity within the state. 
"This is an example of an agency that has overstepped its bounds," said Lawrence Malone, general counsel for the New York State Public Service Commission. 
New York wants the court to revoke FERC's authority to regulate retail sales, because electricity involved in such sales stays within state boundaries and is not subject to federal regulation. 
"We now have two hands on the retail wheel and it doesn't work," Malone told the court. 
Stuck squarely in the middle is FERC, which derives its mandate from an interpretation of the Federal Power Act of 1935. 
FERC ORDERED OPEN ACCESS 
At issue is Order 888, which FERC approved in 1996 after it found that transmission-owning utilities have an inherent incentive to bar access to their wires by competing companies. 
The order essentially opened the grid to wholesale competition by forcing utilities to offer nondiscriminatory policies to energy firms that want to ship electricity over non-owned transmission lines. 
New York argues that FERC's 1996 order oversteps state authority over intrastate commerce set in the 1935 law, while Enron asserts FERC did not go far enough and needs to expand its authority to both retail and wholesale markets. 
Because of the interwoven nature of the transmission grid, electricity that flows within state boundaries cannot be distinguished from power that flows from state to state as a result of wholesale sales, Enron's Cohen argued. 
All of the electricity is competing for space on the grid, and Enron wants FERC to step in to prevent state utilities from "being able to hog those sites for their own use and keep us off the road," Cohen told the court. 
The Supreme Court justices' leanings on the case were unclear from oral arguments, where they questioned lawyers on interpreting the 1935 act. 
At least one justice found the intricacies of electricity transmission mechanics daunting. 
"It's not like putting water through a dam," said Justice Stephen Breyer. "I don't even know how this works."

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

BRAZIL: Brazil readies guarantees for electricity sales.
By Denise Luna

10/05/2001
Reuters English News Service
(C) Reuters Limited 2001.

RIO DE JANEIRO, Brazil, Oct 5 (Reuters) - Brazil is preparing a set of rules to guarantee electricity sales from new thermoelectric plants at market prices in order to get these plants working as soon as possible amid a power crisis. 
The head of the government's task force for the electricity crisis, Pedro Parente, told reporters on Friday the rules would be published next week and would include government funds to back sale guarantees for the so-called merchant plants.
The government of Latin America's largest country regulates electricity prices. Analysts say this system stymies investment in the energy sector, especially in the much-needed natural gas-fired plants, as returns cannot be guaranteed. 
Most of Brazil's natural gas is imported, and its price in local currency terms grows higher when the real depreciates against the dollar. So far this year, the real has lost about 30 percent of its value. 
"We can't have these plants standing idle while the country needs energy," Parente said, citing the example of a plant finished by U.S. energy giant Enron Corp. last month, which is not operating due to a lack of contracts at market prices. 
Brazil needs gas-fired plants as it struggles to reduce its dependence on hydroelectric stations. Two years of droughts have dried up water reservoirs at these plants triggering this year's acute power shortage, which forced the government to impose tough power rationing from June. 
There is a virtual Wholesale Electricity Market (MAE) in Brazil, but it only quotes prices for electricity and has never seen a single contract struck due to high prices there and existing contracts between generators and distributors. 
Now, the government's Brazilian Emergency Energy Sales (CBEE) entity, should provide contracts for the new plants at attractive prices taken from MAE. 
The government expects 10 power plants with a total capacity of 2,153 megawatts to become operational by March 2002, which should boost the total generation capacity of some 70,000 megawatts. 
Apart from Enron's, a plant built by U.S.-based El Paso Corp. is also ready to start producing energy. 
The head of Brazil's National Development Bank (BNDES), Francisco Gros, pointed out the financial guarantee would have a limit, which is yet to be established. 
Gros also acknowledged that the electricity tariffs would have to be reviewed to take into account losses by power utilities since the start of rationing as well as prices to be charged by new power stations. 
"We are thinking of a differential hike which can occur gradually, so that it doesn't hit the pocket so much," he said, explaining that the losses from lower power consumption totaled 20 percent of revenues on average. 
Gros also said the bank had enough resources to finance investment projects in the electricity sector and boost the offer of power.

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


Brazil To Guarantee Contracts In Wholesale Power Market

10/05/2001
Dow Jones International News
(Copyright (c) 2001, Dow Jones & Company, Inc.)

RIO DE JANEIRO -(Dow Jones)- The Brazilian government will intervene in the virtually nonexistent wholesale energy market, known as MAE, by paying new merchant power generators in advance for their contracts, top officials said Friday. 
The decision is valid for independent power generators such as Enron Corp's (ENE) Eletrobolt facility and El Paso Corp.'s (EPG) Macae Merchant unit, which couldn't sell the energy they started producing due to regulatory problems on the MAE.
According to the government's emergency plan to generate more power, these plants were supposed to sell their electricity on the free market according to their concession licenses. 
"The MAE isn't working and these power plants can't sell the electricity which is already available," said Francsico Gros, president of Brazil's Development Bank BNDES, who is heading a commission to come up with a new model for the nation's troubled power sector. "This is a serious problem which is hurting energy supply when we need all the electricity we can get." 
Gros said more than 2,000 megawatts of new electricity are "waiting to be sold" but hasn't reached distributors because there hasn't been any trading on the MAE. 
A recently-created state-run company, called CBEE, will be responsible for settling the contracts for this energy. A percentage of the value of the contract will be paid up front by Brazil's Treasury to guarantee to generators that the contracts will be honored. 
The government will also establish a ceiling price for contracts. Currently, the price set for power trading at the MAE was 364.00 reals ($1=BRR2.737) per megawatt/hour. 
In late August, the Brazilian government had already announced it would start buying electricity from independent generators to sell to distributors as an emergency measure aimed at easing the effects of a power crunch and guaranteeing some power supply over the short term. 
The emergency measures come after the apparent failure of MAE, which kicked off about a year ago with the promise to create a new framework for transactions between power generators and distributors. 
But regulatory problems robbed MAE of credibility, and the innovative electronic exchange system that was especially designed for the power exchange and was supposed to regulate energy trading, wasn't used at all. 
Gros said the government is working to restore confidence in MAE by creating more transparent rules for trading on the free energy market. 
"MAE is an essential part of our plan for Brazil's energy sector model," he said. 
South America's biggest economy is facing an unprecedented energy crisis after inadequate investment in the past few years and a drought this year that left water reservoirs at record-low levels. 
Brazil is more than 90% dependent on hydroelectric plants for the electric energy it consumes. An energy-rationing plan was implemented in June to cut electricity use by an average 20% per month. 
-By Adriana Brasileiro, Dow Jones Newswires; (5521) 9965-1193,
adriana.brasileiro@dowjones.com

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

USA: UPDATE 1-Northwest Natural in talks to buy Portland GE.

10/05/2001
Reuters English News Service
(C) Reuters Limited 2001.

NEW YORK, Oct 5 (Reuters) - Northwest Natural Gas Co. on Friday said it was discussing the acquisition of Portland General Electric Co. from Enron Corp., a deal that would bring together two Oregon utilities. 
The Wall Street Journal said a purchase price of $1.8 billion in cash and stock was being discussed and that Enron would end up with a stake in Northwest. Northwest would also assume $1 billion of debt, it said.
The deal would combine the gas and electric utilities serving Portland, Oregon. 
Northwest shares were down $2.99, or 11.5 percent, at $23 in morning trade on the New York Stock Exchange, giving up gains totaling $2.89 over the three previous sessions. 
Enron shares were up 25 cents at $33.35. 
In a brief statement, Northwest said it was confirming the talks with Enron in response to press reports. It said there was no assurance that a deal would be struck and it would not make any additional comments on the matter unless and until a formal agreement was reached. 
The Wall Street Journal described the talks as advanced. Citing people familiar with the matter, it said the discussions were at a delicate stage and financing could be a problem for Northwest, which had a market value of only $655.5 million based on Thursday's closing stock price of $25.99. 
News of the talks did not surprise UBS Warburg analyst James Yannello, who said Enron has made no secret of its desire to divest Portland GE, which serves more than 725,000 customers in northwest Oregon. Enron, an energy marketing and trading powerhouse, acquired Portland GE in July 1997 for stock valued at $2.1 billion. 
Northwest, doing business as NW Natural, is a gas distribution utility serving more than 500,000 customers throughout Oregon and Vancouver, Washington. On Friday the company raised its quarterly dividend for the 46th year in a row. 
ENRON SEEN RECEPTIVE TO STOCK 
On the possibility that Northwest might have trouble financing a deal, Yannello said that in the past Enron has been receptive to accepting stock. 
He believes Enron "is taking a very close look at all of its assets," and he sees several similar announcements over the next few months. 
Portland GE, a power generator and distributor, had 2000 revenues of $2.25 billion. Its 2001 first-half revenues rose to $1.6 billion from $827 million a year earlier, and net income increased to $71 million from $63 million. 
Portland GE pays Enron dividends totaling $20 million each quarter. 
Portland GE was founded in 1889, delivering power to the city of Portland from the Willamette Falls, 14 miles away on the Willamette River - the first long-distance transmission of electricity in the United States. 
The company owns eight hydroelectric plants with a total capacity of 615 megawatts. It also has a 65 percent interest in a coal-fired power plant in Boardman, Ore., and a 20 percent stake in a Colstrip, Montana, power plant. These interests, along with 742 megawatts of gas-fired power plants in Clatskanie and Boardman, Oregon, give Portland GE total generation capacity of 1,399.9 megawatts.

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


Enron in Talks to Sell Portland General to Northwest (Update6)
2001-10-05 16:09 (New York)

Enron in Talks to Sell Portland General to Northwest (Update6)

     (Adds closing share prices in ninth and 13th paragraphs.)

     Houston, Oct. 5 (Bloomberg) -- Enron Corp. may sell Portland
General Electric Co. to Northwest Natural Gas Co., another Oregon
utility, as part of a plan to shed slow-growing businesses and
focus on commodities trading.

     Northwest said the companies are in talks, though an
agreement isn't assured. The negotiations come more than five
months after the sale of Portland General to Sierra Pacific
Resources collapsed. Enron spokesman Mark Palmer wouldn't comment.

     Enron has been trying to sell Portland General for about two
years. Houston-based Enron, once mainly an operator of natural-gas
pipelines, has transformed itself into the biggest trader of
electricity and gas, a business that doesn't require ownership of
expensive assets such as power plants and pipelines.

     Portland General ``is regulated, and it's really slow growth,
so it doesn't fit in with what Enron's trying to be,'' said Tara
Gately, an analyst with Loomis Sayles & Co., which holds about
135,000 Enron shares.

     The Wall Street Journal today reported that the two companies
are negotiating a sale price of $2.8 billion in cash, stock and
assumed debt. Enron bought Portland General in 1997 for $3.1
billion in stock and debt.

     The utility's earnings are forecast to rise 1 percent next
year, said analyst Robert Christensen of First Albany Corp.

     By comparison, Enron's profit from buying and selling
commodities such as energy, lumber and steel is increasing 25
percent a year as more markets open to competition, said
Christensen, who rates the shares ``strong buy'' and owns them.

     ``It would just be a positive to get (the Portland General
sale) done and use the cash for other businesses,'' Gately said.

     Enron shares fell $1.37, or 4.1 percent, to $31.73.

     Enron stock has declined 62 percent this year, mostly because
of the resignation of Chief Executive Jeff Skilling, concerns
about the California power market, losses at its bandwidth-trading
business and an electricity-contract dispute in India. The stock
dropped even as Enron said second-quarter earnings rose 40 percent
to $404 million while revenue almost tripled to $50.1 billion.

     Sierra Pacific canceled its proposed $3.1 billion acquisition
of Portland General on April 26 because California's energy crisis
made it too hard to win approval. Legislators banned sales of
power plants serving the state, blocking Sierra Pacific from
selling a stake in a generating plant, needed to win clearance for
the deal.

     ``It's a difficult regulatory environment,'' said Bern
Fleming, manager of the $2.4 billion AXP Utilities Income Fund,
which holds about 300,000 Enron shares. ``I wonder if someone in
that region might handle it better.''

                         Northwest

     Northwest shares fell $2.58, or 9.9 percent, to $23.41,
cutting its market value to about $588 million. The company, based
in Portland, Oregon, would take on about $1 billion in debt with
the purchase, the Journal said.

     Bond rating company Egan Jones lowered its credit rating on
Northwest to ``A-'' from ``A,'' still investment grade. Northwest
already has about $450 million in debt, Egan Jones said.

     Other terms of the transaction need to be completed, and an
agreement may be announced in a few days, the Journal reported.

     Northwest serves more than half a million Oregon and
Washington customers. Richard Reiten, Northwest's chairman and
chief executive, was president of Portland General from 1989 to
1996.

     At a price of $2.8 billion, Northwest would be paying 1.2
times sales, less than the average of four times revenue paid for
U.S. utilities this year, Bloomberg data show.

     ``It sounds like the transaction would result in Enron
retaining a minority stake,'' said Andre Meade, an analyst at
Commerzbank Securities Inc. who rates Enron ``accumulate'' and
doesn't own the stock. ``It may be that Northwest can only finance
a portion of the buy at this stage.''

     Oregon regulators likely will approve the transaction if
Northwest shows that its service and rates will stay the same,
Meade said.

     The acquisition would allow Northwest to negotiate better gas
prices by increasing the amount of the fuel that it buys, he said.
The company may also be able to cut costs through job cuts and
eliminating duplicate services.

     Northwest said in July that second-quarter profit more than
doubled to $4.3 million as weather cooled and the company added
customers.

                    California Platform

     Enron acquired Portland General, which has more than 700,000
customers in Oregon, as a platform to sell power into California's
deregulating market.

     Since then, Enron has moved away from owning assets such as
power plants and pipelines to concentrate on energy trading. As
part of that shift, Enron this week agreed to sell oil and gas
fields in India to the U.K.'s BG Group Plc for $388 million.

     Portland General gave Enron experience with the electricity
market and utility regulations, and helped the company develop its
power-trading business, Loomis Sayles's Gately said.

     Sierra Pacific, based in Reno, Nevada, agreed to buy Portland
General in November 1999. To win regulators' approval of the
acquisition, Edison International's utility had to agree to sell a
stake in a Nevada power plant also owned by Sierra.

     California banned power-plant sales by the state's utilities
because of its power shortage, blocking the Nevada sale. Enron
said at the time that it wouldn't rule out trying again to sell
the utility.

     ScottishPower Plc, the U.K.-based owner of the northwestern
U.S. utility PacifiCorp, considered a bid for the utility, the
Observer newspaper reported in April.