California and Energy Providers in Talks Over Electric Fees
The New York Times, 06/26/01

Taking No Chances; Disaster-Conscious Firms Treat Global Warming as a Reality
The Washington Post, 06/26/01

Conflict of Interest
Los Angeles Times, 06/26/01

India Flagging Asset Sales Risk Lower Moody's Outlook (Update2)
Bloomberg, 06/26/01

SMARTMONEY.COM: California Dreamin'
Dow Jones News Service, 06/25/01

Much Calif Power Price Gouging Beyond FERC's Reach -ISO
Dow Jones Energy Service, 06/25/01

Oregon House May Vote Monday On Electricity Deregulation
Dow Jones Energy Service, 06/25/01

USA: Fresh look at wind energy blows to US from Europe.
Reuters English News Service, 06/25/01

USA: UPDATE 3-Some $15 billion at stake in US power refund talks.
Reuters English News Service, 06/25/01

USA: FPL starts wind farm to power 10,500 Wisc. homes.
Reuters English News Service, 06/25/01

USA: Calif says power refund demand will top $9 billion.
Reuters English News Service, 06/25/01


Business/Financial Desk; Section C
California and Energy Providers in Talks Over Electric Fees
By JOSEPH KAHN

06/26/2001
The New York Times
Page 7, Column 1
c. 2001 New York Times Company

WASHINGTON, June 25 -- For the first time since the end of the Clinton 
administration, California and the companies that sell it electricity sat at 
the same table today to try to resolve a multibillion-dollar feud over the 
state's energy bills. 
California is demanding that power companies refund as much as $9 billion for 
what it says were overcharges, while power companies say that the state's 
nearly insolvent utilities owe them billions of dollars. City and state 
officials from across the West are also participating in the negotiations.
The Federal Energy Regulatory Commission convened the talks, which are 
scheduled to last up to two weeks. The sessions are the first since top 
Clinton administration officials tried and failed to broker a settlement to 
California's electricity crisis in their waning days in office. 
''The time to put California's past energy problems to rest and structure a 
new arrangement for California's energy future is now,'' said Curtis Wagner, 
an administrative law judge for the energy commission who is presiding over 
the settlement talks. 
The proceeding, which was standing-room-only on opening day, attracted scores 
of people representing multiple sides in the dispute. The main participants 
are electricity generating companies, electric utilities, and public 
officials from state and local governments and regulatory agencies. 
Mr. Wagner urged the public officials and companies involved to reach an 
agreement on how much California and other states in the Western grid should 
have paid for power over the last year, when California's partly deregulated 
market broke down. He said that if they failed to do so by July 10, he would 
recommend a solution to the energy agency's five commissioners, who would 
then have the option of imposing a settlement. 
Wholesale power costs in California, which totaled $7 billion in 1999, soared 
to about $27 billion last year and, by some state estimates, could double 
again this year. The higher costs, which have not been fully passed along to 
consumers, have rendered California's two main utility companies unable to 
pay their bills and forced the state to buy power in their place. 
The opening bid by Gov. Gray Davis, who set out his views in a letter sent to 
the energy commission today, is that the leading electricity generators 
should refund about $9 billion that ''they have overcharged the people of the 
state of California.'' Michael Kahn, chairman of the California Independent 
System Operator, is leading the state delegation. 
Generating companies have dismissed that figure as grossly inflated. They 
acknowledge that prices are high. But they say the charges are linked to 
shortages of natural gas, a crucial fuel for electricity generation, and were 
set fairly in a free market. 
The companies also contend that a large proportion of what they have billed 
California is a credit premium justified because wobbly utilities owe them as 
much as $15 billion. Reliant Energy, Duke Energy, the Williams Companies, the 
Enron Corporation and the Mirant Corporation are among the major sellers of 
electricity in the Western region. 
The energy commission, which has the duty of determining ''just and 
reasonable'' electricity prices under a New Deal-era law, long ago found that 
the California market had become dysfunctional and that prices were 
unjustified. But the agency has struggled to come up with a method for 
determining fair rates, changing its method three times in recent months. 
So far, the agency has identified about $125 million in potential 
overcharges. But that number was reached using a restrictive method that the 
agency has since abandoned. 
Last week, the agency adopted a new price control regime that is intended to 
limit price spikes throughout the West. If the controls it is using now were 
retroactively applied to electricity sales made over the last year, the 
generators would be asked to refund much more money. By some estimates, the 
refunds could total more than $1 billion but seem likely to fall well short 
of the $9 billion California is seeking.

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


Financial
Taking No Chances; Disaster-Conscious Firms Treat Global Warming as a Reality
Greg Schneider
Washington Post Staff Writer

06/26/2001
The Washington Post
FINAL
E01
Copyright 2001, The Washington Post Co. All Rights Reserved

After two unusually warm winters melted profits at his natural gas 
distributing company in Dallas, Robert W. Best decided he needed protection. 
So he spent $4.9 million on a new tool called weather insurance. 
If global warming causes the customers of his Atmos Energy Co. to continue 
using less gas to heat their homes, the policy will pay out cash to offset 
the company's operating losses.
That's the kind of practical response beginning to take place throughout U.S. 
industry as business leaders face up to the prospect of climate change. 
While the Bush administration debates other governments about whether 
man-made pollution causes global warming -- and, if so, who should take 
responsibility -- many industries are trying to cope with the realities of 
extreme weather. 
Insurance companies have begun hiring meteorologists to reassess the risk of 
natural disasters. Farmers are planting different types of crops and looking 
for crisis-proof seeds. Great Lakes shipping companies are petitioning 
Congress for dredging to compensate for falling water levels. Colorado ski 
resorts are discounting tickets to bring people back to the slopes after two 
sweaty winters. 
These changes are incremental, not massive shifts in operations. But over 
time, those incremental reactions could add up to a major adaptation to 
"climate change's pervasive and growing impacts over the next century," said 
Nick Sundt, a scientist with the U.S. Global Change Research Program in 
Washington. 
"I don't know for sure about global warming, but I do know the past 15 or 20 
years have been warmer than normal," said Best, the chairman, president and 
chief executive of Atmos. "Some people will claim it's the natural cycle, but 
for us it doesn't really matter. . . . We've got to do something to protect 
ourselves." 
Atmos, which distributes natural gas in 11 states, including Virginia, began 
investing in weather insurance a year ago. The winter that began in November 
1998 and the one that followed were both more than 15 percent warmer than 
usual across the company's entire market, Best said. 
He read about weather insurance in a trade journal and bought it through 
energy broker Enron Corp. If temperatures had been warmer than average last 
winter by a certain amount, Atmos would have gotten money back. As it turned 
out, last winter was slightly cooler and the insurance didn't kick in. But 
Atmos, concerned about the broader warming trend, has signed up for two to 
three more years. 
Enron began offering the insurance in about 1997, said Todd Kimberlain, chief 
meteorologist for Enron Weather Risk Management. El Nin~o -- a periodic flow 
of warm surface water in the Pacific that disrupts weather patterns worldwide 
-- had produced several extremely warm winters, and companies were looking 
for a way to make themselves less financially vulnerable, Kimberlain said. 
Some scientists believe El Nin~o and other weather systems intensify when 
gases such as carbon dioxide are released into the atmosphere by the burning 
of fossil fuels. Such substances are called greenhouse gases because they 
tend to trap heat, warming up the earth's surface. 
The extra heat could provide energy to drive El Nin~o, hurricanes and other 
weather events. Warmer air can hold more moisture, so when it does rain, 
there is more potential for flooding. The real danger of global warming, some 
scientists say, is that it could produce greater extremes in the weather -- a 
possible explanation for such recent phenomena as unforeseen high storm waves 
in the North Atlantic and flooding in Europe. 
An unusually fierce El Nin~o has been blamed for reducing water levels in the 
Great Lakes over the past three years. Pleasure boats float below dock level 
and cargo ships can't pull up to shore to unload -- all symptoms of a problem 
that caused shipping companies to lose thousands of tons of carrying capacity 
last year. 
George J. Ryan, president of the Lake Carriers' Association of shipping 
companies, said he personally worries about the causes of the lower water 
levels, but professionally just has to focus on the solutions. "I have to say 
from an industrial standpoint, I just have to consider what it will take for 
us to remain competitive," he said. 
While Great Lakes water levels have gone through low cycles in the past, Ryan 
said, none of them came on as quickly as the most recent cycle. The recent 
warm winters prevented the lakes from freezing, causing them to continue 
evaporating year-round. 
For now, boating interests are asking Congress to spend about $2 million to 
deepen a pair of Great Lakes channels. But both industry and scientists fear 
global warming could cause long-term water loss -- predicted to be as much as 
four feet by the end of the century -- that would require far more expensive 
dredging and could even threaten the U.S. steel industry with crippling 
transportation costs. 
The same uncertainty has affected the recreational skiing industry. Beginning 
in 1998, U.S. ski resorts suffered two straight winters of unusual warmth and 
low snowfall. While this year brought better conditions for the Northeast, 
several resorts in Colorado had to extensively discount tickets to boost 
their business. That led to sharp drops in profits. 
On the other hand, business is fine for Areco Snow Systems North America, the 
Vermont-based distributor of Swedish snow-making equipment. Artificial snow 
has become the only way ski resorts can guard against increasingly erratic 
winters, said the company's president, Peter Geise. "There's definitely a 
warming trend," he said. 
For some industries, the biggest worry is that the weather is becoming more 
unpredictable and extreme. 
"What's of increasing concern to those in agriculture is that it seems like 
we have greater variation in the weather," said Richard Stuckey, past 
executive vice president of the Iowa-based Council for Agricultural Science 
and Technology. 
What farmers really need, he said, are seeds that can withstand both drought 
and floods. In western Iowa, for instance, a recent period of unusual dryness 
led farmers to switch from corn to the more drought-resistant sorghum. But 
now they are struggling with unseasonably cool, wet weather. 
Wanda Sorrells hears similar complaints from gardeners all over the country 
who call her for advice at the Park Seed Co. in Greenwood, S.C. As a senior 
staff horticulturist, Sorrells said she has become increasingly perplexed by 
the weather extremes she hears about from customers. 
"There just seem to be unusual occurrences and these fluctuations where it 
will be unusually warm for a few weeks and then unusually cold, and that can 
be hard on certain plants," Sorrells said. 
The biotechnology giant Monsanto Co. has an extensive search program for 
plant genes that are resistant to drought and other stresses in hopes of 
engineering hardier crops. While a company spokesman said those efforts are 
not aimed specifically at global warming, they are in response to an 
increasing demand from farmers for more resilient plants. 
Agricultural scientists agree there are higher levels of carbon dioxide in 
the atmosphere. But they disagree on whether the increase is caused by human 
activity and whether it leads to global warming. Higher carbon dioxide is not 
necessarily bad for agriculture; it's what plants breathe, after all. 
Even climatic warming could have short-term benefits. 
"The temperature change in itself might lengthen the growing season and it 
might enable people farther north to grow crops that are now" not feasible, 
said Paul Waggoner, a scientist at the Connecticut Agricultural Experiment 
Station in New Haven. "Maybe the Dakotas would become like Kansas. You'd go 
from spring wheat to winter wheat. That sort of thing." 
While farmers have years to adapt to such potential changes, the uncertainty 
alarms another industry: insurance, which needs to understand long-term risk 
to set rates and stay financially viable. "They don't want to get caught 
behind the eight ball and have the risks change without them knowing about it 
in advance," said John M. Wallace, a professor of atmospheric sciences at the 
University of Washington who has taken part in national climate studies. 
Many of his colleagues, Wallace said, have held conferences to explain 
climate change to the insurance industry, "and they're starting to hire some 
of our graduates, as well." 
One of those graduates is Lixin Xeng, who advises insurance companies as a 
vice president for risk analysis and technology services at Benfield Blanch 
Co., a global risk management and distribution firm. 
"This year is warmer than 50 years ago on average, no argument," Xeng said. 
"And what we're interested in is whether this warming causes more natural 
disasters to occur." 
Those disasters can range from the unexpected ferocity of a Hurricane Andrew, 
which devastated southern Florida in 1992, to the spread of a tropical 
disease such as the West Nile virus in a temperate place such as New York. 
Meanwhile, British Petroleum PLC not only accepts that rising levels of 
carbon dioxide are causing the earth's average temperature to rise, it hopes 
to make a profit on it. The company is looking for profitable ways to reduce 
emissions and hopes to become the world's largest manufacturer of solar 
energy equipment. 
"Now people are starting to look at this as a business opportunity," said 
Jeff Morgheim, who occupies a new position at BP: climate change manager. 
Companies, he said, are starting "to look at this in a whole new way."

http://www.washingtonpost.com 

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



California; Letters Desk
Conflict of Interest

06/26/2001
Los Angeles Times
Home Edition
B-12
Copyright 2001 / The Times Mirror Company

Re "Army Boss Vows No Conflict in Enron Ties," June 20: 
I see that Army Secretary Thomas E. White Jr., holder of $25 million worth of 
stock in the Enron energy company, is seeking advice from Army lawyers about 
whether to recuse himself from any role in Army decisions on Enron contracts. 
This is the same man who vowed in his confirmation hearing: "I will 
personally commit to you to avoid even any appearance of a conflict in terms 
of any future relationships that Enron may choose to have with the department 
or attempt to have with the department."
Would somebody please tell Secretary White that no decent, honest person 
needs a lawyer to tell him that he does, indeed, have a very serious conflict 
of interest. 
Bill Sharp 
Huntington Beach

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


India Flagging Asset Sales Risk Lower Moody's Outlook (Update2)
2001-06-26 01:50 (New York)

India Flagging Asset Sales Risk Lower Moody's Outlook (Update2)

     (Adds date Fitch lowered its outlook.)

     Mumbai, June 26 (Bloomberg) -- India must step up sales of
state assets and trim its budget deficit to avoid a reduction in
the outlook for its debt, said Kristin Lindow, vice president and
lead analyst for India at Moody's Investors Service.
     ``We are disappointed and would like to see urgency in
completing the economic reform process,'' Lindow said in an
interview. ``Our positive outlook on India is getting to a point
where we are wondering whether it shouldn't be changed.''
     A lower outlook for India's debt would mean the country and
its companies would miss a chance to reduce their borrowing costs,
among the region's highest. The yield on India's benchmark 10-year
bond fell 5 basis points to 9.52 percent today on expectations of
an interest rate cut. That's higher than 6.33 percent for
comparable Chinese bonds and 6.44 percent for South Korean bonds.
     Moody's gave India a positive outlook in June 1999, meaning
it was considering an upgrade of its ``Ba2'' rating, which is two
notches below investment grade and among the lowest in the region.
Since then, India has missed targets for the sale of state assets,
a move that would boost corporate performance and raise revenue
for the state.
     ``The timing of the government's sale of state-run companies
isn't good,'' Lindow said. ``Several of the companies have now
become unprofitable.''
     Among the state-run companies to be privatized are Indian
Airlines and Bharat Heavy Electricals Ltd., a maker of power plant
equipment.

                         Airline Loss

     Indian Airlines lost 1.77 billion rupees ($38 million) in the
year ended March 31 and is expected to lose another 2.51 billion
rupees this financial year, according to media reports. Bharat
Heavy Electricals' profit for the year ended March 31 dropped 49
percent to 3.05 billion rupees.
     India needs money from sales in stakes of more than 200
companies to trim its budget deficit. In the fiscal year that
ended March 31, India planned to sell stakes in 43 companies to
raise 100 billion rupees. It made just one sale -- a 74 percent
stake in a bakery, Modern Food Industries, for 1 billion rupees.
     This year, India plans to raise 120 billion rupees through
asset sales. The government plans to trim the deficit to 4.7
percent of gross domestic product this fiscal year from an
estimated 5.2 percent of GDP last year.

                    Falling Bond Yields

     Government bond yields have been falling to record lows on
expectations that the Reserve Bank of India will cut interest
rates, following a widely predicted move by the U.S. Federal
Reserve later this week.
     ``There won't be any movement in the market based on the
possibility of Moody's lowering its outlook on India,'' said Rajiv
Anand, who manages 16 billion rupees of Indian debt for Standard
Chartered Mutual Fund. ``The correction would happen if Moody's
actually downgraded the rating.''
     Bond yields rose after ratings company Fitch cut India's long-
term sovereign ratings outlook to ``negative'' from ``stable'' on
May 31. Fitch, which rates India ``BB plus,'' one notch below
investment grade, cited ``concerns about fiscal policy,
privatization and a deterioration in the investment climate.''

                         Enron Dispute

     Lindow of Moody's said she was concerned about a dispute
between the Maharashtra State Electricity Board and Enron Corp.,
the country's biggest foreign investor, which built a $3 billion
power plant. The dispute is widely seen as a litmus test for
foreign investment in India.
     The state electricity board has refused to pay 3 billion
rupees for power supplied by Enron's local unit, Dhabol Power Co.
India hasn't delivered on guarantees to pay for the power. Lindow
also cited the Enron dispute as a cause
     ``Foreign investors are becoming wary because of Enron's
problem and the government failure to honor its contractual
obligation,'' Lindow said. ``It has put up several red flags.''
     A third major ratings company, Standard & Poor's, rates India
``BB,'' two notches below investment grade.




SMARTMONEY.COM: California Dreamin'
By Michael DeSenne

06/25/2001
Dow Jones News Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

Of SMARTMONEY.COM 

DESPITE THE ROUND-THE-CLOCK efforts of state and federal officials to solve 
California?s energy crisis, residents are bracing for more rolling blackouts 
this summer. And while the nation?s energy prices on the whole are starting 
to decline, it?s clear that fossil fuels won?t light our homes and cool our 
offices forever.
Even President Bush, a loyal oilman, understands this reality. While pushing 
a reform plan heavy on fossil fuels last month, he acknowledged the need for 
new, alternative-energy sources. 
Of course, there?s still no consensus on what those sources will be, and this 
is a high-risk game. Investors who pick correctly from among the leading 
possibilities could find themselves sitting on a gusher during the next 
energy crunch. But as anyone who invested in previous alternative-energy 
sources like solar power, ethanol or - god forbid - cold fusion - can attest, 
this is a business that?s big on dreams, long on waits and short on 
commercially viable technologies. 
And even the long-term winners among these stocks (if there are any) can be 
counted on to deliver some major volatility in the meantime. The blame for 
that goes to the California crisis, whose twists and turns drive 
alternative-energy stocks up and down, headline by headline. "Anytime it 
appears that the California panic is being solved, these stocks tend to trade 
down, so the sentiment is shifting on a daily basis," says Christine Farkas, 
a Merrill Lynch energy analyst. 
For adventurous investors who find such prospects electrifying, the most 
promising technology at this point seems to be the fuel cell, a device that 
extracts hydrogen from fossil fuels such as natural gas or coal and converts 
it into electricity. Environmentalists love fuel cells because the byproducts 
of the electrochemical process - mostly heat and water vapor - include few 
harmful emissions, especially when compared with what?s put out by internal 
combustion engines. 
Right now, the fuel-cell sector is crowded, with different companies at 
different stages of the product-development cycle aiming for different 
end-users. While some are building smaller fuel-cell systems to power cars, 
others are constructing large fuel-cell-powered plants that can meet the 
electricity needs of huge factories. Still others are targeting residential 
uses. Which ones are likely to emerge as leaders? One may be FuelCell Energy 
(FCEL). According to Chief Executive Jerry Leitman, the Danbury, Conn.-based 
fuel-cell developer expects to start booking orders by year?s end for its 
first product, a 300-kilowatt power plant roughly the size of a semi-trailer 
that can light up the equivalent of 100 homes. Quieter and more mobile than 
traditional electricity generators, the fuel-cell-powered plants can be 
located closer to commercial and industrial customers, such as hospitals and 
office buildings. Eventually, FuelCell plans to roll out 1.5 megawatt and 
three megawatt units. Investors seem to like what they see. FuelCell?s stock 
price, while highly volatile, has jumped 76% over the past year. (By 
contrast, fuel-cell rival Plug Power?s (PLUG) residential products are 
further from retail reality - and its stock is down 65% in the past 12 
months. The same goes for Ballard Power Systems (BLDP), a Canadian firm 
targeting the auto industry, whose shares have lost 50% in the last year.) 
Earlier this month, FuelCell netted $241.5 million through a secondary stock 
offering. CEO Leitman says the proceeds will be used to boost annual 
manufacturing capacity to between 400 megawatts and 500 megawatts, a goal he 
expects to reach in 2004. "That puts us into a profitable position when we 
get to that 400 to 500 megawatts of production," he says. (Leitman declined 
to offer more specific profit projections.) Merrill Lynch expects the company 
to hit 400 megawatts of capacity in 2004 or 2005, with profitability coming 
in 2005. In the interim, however, the earnings picture isn?t pretty. For its 
second quarter ended April 30, FuelCell booked just $6.5 million in revenues 
and posted a net loss of $5.1 million. 
FuelCell investors were reminded about quickly shifting sentiment last 
Tuesday. During a hearing over state funding of an Enron (ENE) fuel-cell 
project in Connecticut, opponents of the plan suggested the money could be 
better spent on other power endeavors. As a result FuelCell, which would 
supply fuel cells to the power-plant project, saw its shares fall 17% to 
$24.50 that day. In response to the sell-off, Friedman Billings upgraded the 
stock to Buy from Accumulate, saying the drop was unwarranted since long-term 
fundamentals remain very positive. FuelCell shares jumped 10% to $26.97 on 
Wednesday. A final decision on the funding won?t be handed down by state 
regulators until September. The next hearing is scheduled for mid July. 
Another promising player is Active Power (ACPW), an Austin, Texas-based maker 
of battery-free backup power systems. The gist: A spinning steel disk stores 
kinetic energy, which kicks in when a primary power supply goes down. The 
target audience includes high-tech firms and telecoms that rely on 
uninterrupted power supplies. Active Power says one of its systems, about the 
size of a refrigerator, replaces 50,000 pounds of lead and sulfuric-acid 
batteries. 
The good news: Active Power already has products on the market. The most 
promising, which went on sale last summer, is the CAT UPS, a flywheel-based 
backup power system jointly developed with Caterpillar (CAT). Base units 
retail for $90,000 to $115,000, with top-of-the-line configurations selling 
for as much as $350,000. The product, which is expected to make up about 80% 
of Active Power?s sales for 2001, is already having an impact on the top 
line: Revenues jumped to $5.1 million in the first quarter, up 91% from the 
fourth quarter. (It posted a net loss of $6.7 million, or 17 cents a share.) 
Active Power shares, which ended Friday at $18.47, are down 65% from their 
first-day close of $52.75 but are still above their August 2000 offering 
price of $17. 
Active Power is on the verge of announcing the distributor of its next 
commercial product, the HIT6, a more advanced power-supply product aimed at 
telecoms that?s being field-tested in 2001 with commercial rollout slated for 
2002. Upbeat news about another commercial product could do some nice things 
to Active Power?s stock - in the short run, at least. And that?s the essence 
of alternative-energy investing: lots of promise, little profit and stunning 
share price volatility based mostly on the news. But while we?re still a long 
way from a fuel cell in every proverbial pot, we?re a lot closer than we used 
to be. And the California crisis is only heating up the race to find new 
power sources. After weighing the risks, which are substantial, the key 
question for investors is, are these technologies of tomorrow worth putting 
money into today? If you decide that they are, be sure to plunk down your 
money after a big sell-off. There?ll probably be plenty to choose from. 
For more information and analysis of companies and mutual funds, visit 
SmartMoney.com at http://www.smartmoney.com.

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


Much Calif Power Price Gouging Beyond FERC's Reach -ISO
By Jason Leopold
Of DOW JONES NEWSWIRES

06/25/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

LOS ANGELES -(Dow Jones)- Federal energy regulators only have the authority 
to order refunds for about a third of the $9 billion California Gov. Gray 
Davis claims energy companies have overcharged the state in the 12 months to 
May 2001, documents from the state's wholesale market operator show. 
Of the total, $2.9 billion came from the May-September period the Federal 
Energy Regulatory Commission has said it can't act on, and $2.8 billion from 
the October-May period is attributable to municipal utilities over which FERC 
lacks jurisdiction, according to documents from the California Independent 
System Operator.
That leaves just $3.3 billion in alleged overcharges that FERC could 
potentially order refunded - far less than the $9 billion Davis seeks. 
Talks between generators and state officials to settle billions of dollars in 
unpaid bills and issues of overcharging began Monday. Curtis Wagner, the FERC 
administrative law judge presiding over the talks, has said California will 
likely see refunds from generators, but far less than the $9 billion Davis 
expects. 
Davis said Sunday California is going to Washington, D.C., "with one goal, 
and that is to bring back $9 billion." 
Nearly half that amount is attributable to municipal utilities, the ISO 
documents show. The ISO said the Los Angeles Department of Water and Power, 
for example, overcharged California $75 million between May and October. 
David Freeman, the governor's chief energy adviser and the former general 
manager of the LADWP, said the agency didn't overcharge the state, but 
conceded it profited by selling spare power to the ISO. 
Davis adviser Nancy McFadden said the state needs FERC to lay the groundwork 
for the state to seek refunds from public utilities by ordering refunds from 
corporate energy suppliers. 
But during a conference call Sunday with reporters, McFadden and Davis press 
secretary Steve Maviglio couldn't explain how the governor would go about 
getting refunds from companies whose wholesale power prices aren't regulated 
by FERC. 
Davis testified before the U.S. Congress last week that generators 
overcharged the state $9 billion and that FERC should order the refunds. 
State Sen. Jim Brulte, R-Rancho Cucamonga, has asked for an investigation 
into Davis's testimony, saying the figures were based on "shaky 
calculations." 
To come up with its conclusions, the ISO compared hourly market prices 
received by sellers to an estimate of market prices that could have been 
expected under competitive market conditions. 
The ISO established a benchmark for what it determined was competitive - at 
times about $125 per megawatt-hour to $200/MWh, a fraction of actual prices 
in the market - based on the cost of natural gas and compliance with 
air-quality rules. 
The ISO, however, typically used the price of gas at California's northern 
border, according to the documents. Generators paid a higher price for the 
fuel in Southern California, raising the cost of making electricity. 
The ISO also used reports of earnings by the state's "Big Five" power 
suppliers during 2000 - earnings that for some quadrupled - to draw the 
conclusion that generators overcharged the state, according to the documents. 
The ISO attributed high power prices in part to the state's three largest 
utilities' failure to buy the power they needed in advance, leaving the grid 
operator to pick up the shortfall at the last minute, according to the 
documents. 
The ISO alleges the following companies overcharged the state by the listed 
amounts between May 2000 and February: American Electric Power Service Corp. 
(AEP): $22.9 million 
Arizona Public Service Co. (PNW): $24.6 million 
Aquila Power Corp. (ILA): $28 million 
Avista Energy Inc. (AVA): $48 million 
Automated Power Exchange: $16 million 
British Columbia Power Exchange Corp: $439 million 
Calpine Corp. (CPN): $236 million 
Constellation Power Source Inc. (CEG): $7.8 million 
Cargill-Alliant LLC: $1.4 million 
Citizens Power Sales: $557,000 
Coral Power, LLC,. a unit of Shell Oil (RD): $27 million 
Duke Energy Corp. (DUK): $804 million 
Dynegy Inc. (DYN): $530 million 
Enron Corp. (ENE): $39 million 
El Paso Corp. (EPG): $29 million 
El Paso Power Electric Co. (EE): $24,475 
Hafslund Energy Trading LLC: $712,528 
Idaho Power (IDA): $28 million 
Koch Energy Trading: $2.5 million 
Los Angeles Department of Water and Power: $75 million 
MDSC: $24 million 
Mieco Inc.:$1.6 million 
Morgan Stanley Capital Group (MWD): $124,644 
NewEnergy Inc.: $1.5 million 
Nevada Power Co. (SRP): $9.1 million 
PacifiCorp: $65 million 
PECO Energy Co. (EXC): $4.2 million 
Portland General Electric (ENE): $44 million 
Public Service Co. of Colorado: $14.1 million 
Public Service Co. of New Mexico (PNM): $15.5 million 
Puget Sound Energy: $24 million 
Reliant Energy Inc. (REI) $750 million 
Mirant Corp. (MIR), formerly Southern Co., $753 million 
*Sempra Energy Trading Corp. (SRE): $82 million (this number has been
wiped out by the ISO) 
Sierra Pacific Power Co. (SRP): $23 million 
TEK: $11 million 
Tuscon Electric Power: $1.1 million 
UPA: $131,715 
Winston and Strawn: $11,917 
Williams Cos. (WMB) $860 million 

Total FERC jurisdictional sellers: $4.7 billion 
*Total without SETC/SDG&E: $4.6 billion 

Total FERC and Non-FERC sellers: $6.7 billion 
*Total without SETC/SDG&E: $6.6 billiion 

Total March-May overcharges: $2.3 billion 

-By Jason Leopold, Dow Jones Newswires; 323-658-3874; 
jason.leopold@dowjones.com

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


Oregon House May Vote Monday On Electricity Deregulation

06/25/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

LOS ANGELES -(Dow Jones)- Oregon's House of Representatives may vote Monday 
on delaying electricity deregulation for large businesses until March 1, 
2002, a spokesman for the Oregon Public Utilities Commission, or OPUC said. 
Under the partial-deregulation bill, large business customers of Enron 
Corp.'s (ENE) Portland General Electric Co. unit and Scottish Power's (SPI) 
PacifiCorp (X.PCP) unit could buy power from competing electricity suppliers, 
or opt to retain regulated rates until July 2003, said OPUC spokesman Bob 
Valdez.
Residential and small-business customers would continue to have regulated 
rates. 
If the restructuring bill passes, the OPUC would determine by late July which 
customers qualify as "large businesses", Valdez said. He added that he 
couldn't speculate on what percentage of the state's total electricity load 
might fall under partial deregulation. 
The bill, which passed the Senate on Friday and is scheduled for a vote in 
the House Monday, delays large customer choice from its original Oct. 1 start 
date. 
The revised date ensures the state will get through the winter, when demand 
is highest, without the possibility of glitches caused by the new system, 
Valdez said. 
The new date also ensures customers won't mistakenly attribute a rate 
increase, also planned for Oct. 1, with the start of deregulation. The rate 
hike is necessary because the Bonneville Power Administration, a federal 
hydropower marketer which sells to the state's utilities, must buy some power 
next year in the high-priced spot market to meet burgeoning customer demand. 
The rate hike will reflect the extra costs. 
"Delaying the start of restructuring until March provides a separation in 
people's minds from the rate hike this fall. It's political," Valdez said. 
Monday's vote on the Republican-sponsored bill also may be delayed, however. 
Democrats walked off the House floor late Monday morning, because they were 
upset about a separate bill on redistricting, Valdez said. 
"At most, the delay will last a day or so. At some point, the House Speaker 
will get tired of it and just force them back on to the floor," Valdez said. 
Republicans have a six-vote majority in the House, but support for the 
restructuring bill doesn't really fall along party lines, he said. 
-By Jessica Berthold, Dow Jones Newswires; 323-658-3872; 
jessica.berthold@dowjones.com

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


USA: Fresh look at wind energy blows to US from Europe.
By Jonathan Landreth

06/25/2001
Reuters English News Service
(C) Reuters Limited 2001.

NEW YORK, June 25 (Reuters) - Windpower is poised for a relaunch in the 
United States, where regulators, investors and utilities, following Europe's 
lead, are tilting toward improved technology that now makes windpower 
cost-effective, experts say. 
Long-tainted by failures that burned early U.S. backers and by critics who 
saw windmills as an eyesore and as a danger to birds, windpower still only 
provides the United States with less than 1 percent of its energy.
"But now there is a perceived shortage of power that wasn't there 5 to 10 
years ago," said Maurice Miller, an independent renewable energy consultant 
in California, where a bungled attempt at deregulation and a host of other 
factors has made rolling electricity blackouts part of life in the state. 
"Wind energy companies are now perceived as viable, competitive businesses," 
said Miller, who, as former chief financial officer of U.S. Windpower, the 
wind industry's most notorious failure would know. 
Nowadays, windpower is a viable business by nearly any standard, and is 
growing at 25 percent a year worldwide. 
Led by Denmark, which gets 10 percent of its electricity from wind, and by 
widespread wind development in Germany and Spain, well-placed windfarms in 
spots such as the American plains states are estimated to be capable of 
producing three times the total electricity now generated in the entire 
nation. 
Wind turbine technology, vastly improved in recent years, is ideal for 
flatlands where hot air rises - off the plains of the Dakotas, Kansas and 
Texas, for instance - and where cool winds are drawn off bodies of water such 
as the Great Lakes, the Gulf of Mexico or the Pacific Ocean off California's 
coast. 
SLOW TO SHIFT 
But Merrill Lynch analyst Steven Fleishman said wind is still a "minute 
factor" for the two biggest players in the U.S. windpower market, giant 
utility Florida Power and Light , and Enron Corp. , the largest U.S. maker of 
wind turbines. 
Still, spurred by prices that make windpower as affordable as natural gas or 
coal as well as by tax subsidies for developers and government mandates 
requiring utilities to buy more power from renewable energy sources, both 
companies are now involved in big windpower projects. 
And now a handful of other U.S. fund managers say wind has huge potential to 
make money. So much so, that Jack Robinson's Winslow Green Growth and Green 
Century Balanced mutual funds have twice the weighting in renewable energy 
companies as the S&P 500 index . 
"Wind is at an inflection point where it doesn't need subsidies to be 
competitive with traditional power sources," Robinson said. 
THE COST OF WIND 
While governor of Texas, President George W. Bush signed a law mandating 
utilities to buy more power from alternative energy sources. Texas now has 
the fourth largest installed windpower capacity in the United States, and can 
deliver wind power at a competitive 5 cents per megawatt hour. 
But Robert Beningson, chief executive of York Research Corp., an alternative 
energy developer based in New York City, said wind only achieves such 
competitive prices with the crutch of tax subsidies for developers. 
What the U.S. wind industry needs now to catch up with Europe's wind power 
craze, Beningson said, is an extension of the Production Tax Credit (PTC), a 
move mentioned but not mandated in the Bush administration's new proposed 
energy policy. 
Lyn Harrison, editor of industry magazine Windpower Monthly agrees. 
"Wind is Bush's chance to marry his big business stance and the environmental 
messages in his proposed energy plan," said Harrison, whose magazine has 
offices in wind-rich Denmark and California. 
Long term forecasts in the early 1990s by Pacific Gas & Electric and the 
Electric Power Research Institute (EPRI) said wind would ultimately become 
the least expensive electricity source. 
Current data shows those forecasts are no longer pipe dreams. Based on its 
knowledge of current market conditions, the Washington, D.C.-based American 
Wind Energy Association (AWEA) estimates that the cost of tax-subsidzed wind 
energy at good sites ranges from 3 cents to 6 cents per kilowatt-hour (kWh). 
Without the tax subsidies, or PTCs, wind generated electricity still sells at 
a low cost between 4 cents and 6 cents per kWh, comparable with the 4.8 cent 
to 5.5 cent per kWh cost of coal and the 3.9 cent to 4.4 cent per kWh cost of 
gas. 
WIND'S TROUBLED PAST 
But experts note that wind still suffers from its early bad reputation with 
U.S. investors. 
Since its inception in the United States the late 1970s, the American wind 
power industry faced an uphill battle against bigger and more established oil 
and gas companies. 
In September 1993, a California company called U.S. Windpower, then the only 
U.S. maker of wind turbines, raised $90 million in an initial public offering 
underwritten by Merrill Lynch, hoping to use the money to improve its turbine 
technology. 
By May 1996, U.S. Windpower filed for bankruptcy after a series of mechanical 
failures proved windpower too expensive. 
"There isn't a major institutional investor who wasn't burned by U.S. 
Windpower," said Jan Paulin, chief executive of Sea West, a private wind 
developer based in San Diego. "Their efforts were noble but they 
miscalculated." 
Because wind development's cost reflects the time and money needed for making 
better equipment, scouting the windiest sties, and getting permits to build 
wind farms, the economics of the wind turbine business are highly sensitive 
to the interest rate banks charge developers, experts say. 
"It's a shame that U.S. institutional investors have such an outdated view of 
the industry and the technology," Paulin said. "To this day, most of the U.S. 
wind power developments were initially funded by European banks." 
Also, governmental commitment to windpower in Europe helped jump-start the 
industry before it became self sufficient. 
WINDPOWER IN EUROPE 
If wind farms were financed on the same terms as natural gas plants, their 
cost would drop by nearly 40 percent, according to an AWEA study. 
Technological improvements that enable turbines to generate steady streams of 
power no matter what the wind's speed means that it is just a matter of time 
before U.S. investors, like Europeans, head straight into the wind business, 
fund manager Robinson said. 
"American investors will come to wind, but they may not be investing in U.S. 
companies at this point in time as there are very few pure plays," said 
Robinson, whose funds hold the shares of Denmark's two biggest publicly 
listed wind turbine makers, Vestas Wind Systems , the largest wind turbine 
maker in the world, and NEG Micron , the No. 4 wind turbine company in the 
world. 
Shares of Vestas and NEG Micron - both part of the Copenhagen Bourse's top-20 
index, KFX - soared on May 1 after a Danish government researcher forecast 
that wind turbines would supply 10 percent of the world's electricity in 20 
years. 
Soon after, Merrill Lynch started coverage of Vestas with a "neutral" rating 
in the intermediate term and a "buy" rating in the long term, citing a belief 
that the wind power companies were on course for a sustained period of strong 
growth. 
Denmark already gets 10 percent of its power from wind, and Vestas and NEG 
Micron share prices have doubled in a year. 
Vestas also holds a 40 percent stake in world's No. 2 wind turbine maker, 
Gamesa Eolica, which is part of Spain's Gamesa Group .

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


USA: UPDATE 3-Some $15 billion at stake in US power refund talks.
By Patrick Connole

06/25/2001
Reuters English News Service
(C) Reuters Limited 2001.

WASHINGTON, June 25 (Reuters) - California and other Western states angered 
by alleged bilking by power generators on Monday sought to convince the U.S. 
Federal Energy Regulatory Commission's chief law judge to refund them some 
$15 billion for wholesale power purchases made during the past year. 
The settlement talks, involving dozens of companies and state officials from 
California and the Western region, were to continue for the next two weeks.
California alone believes it was bilked out of more than $9 billion by 
electricity generators during an unrelentingly expensive power price spike in 
its partially deregulated wholesale market. 
"We are not going to ask FERC for $9 billion. We're going to ask for a lot 
more than that for our litigating position," Michael Kahn, chairman of the 
California Independent System Operator, told reporters outside the 
closed-door settlement conference at FERC. The California ISO operates the 
state's electricity transmission grid. 
Judge Curtis Wagner, who convened the talks in a packed hearing room at FERC 
headquarters, said parties must reach a deal "now" or face the prospects of a 
FERC-ordered plan. 
"I can tell you now that you are far better off to work out the refund issue 
in these settlement proceedings," he told lawyers representing some 60-odd 
parties before the conference went into closed session. 
"The time to put California's past energy problems to rest and structure a 
new arrangement for California's energy future is now. We can do it if we 
try. I have the utmost faith in you," Wagner said. 
CLAIMS, COUNTER CLAIMS 
While California claims it was overcharged by electricity generators who 
deliberately pushed prices higher, many of the out-of-state generators claim 
they have not yet been paid for some transactions. 
The generators - including Enron Corp. , Duke Energy Corp. and Williams Cos. 
- have denied wrongdoing. 
A representative from energy generator and marketer Reliant Energy Inc. 
attending the settlement conference said he was concerned the California 
Independent System Operator's method of calculating its $9 billion sales 
overcharge figure is based on "black box" methodology. 
"Those are mystical calculations," said John Stout of Reliant. "From what we 
can gather they don't cover all our costs." 
The ISO's cost calculations do not account for operation and maintenance fees 
of generating facilities, Stout said. 
"That doesn't seem quite fair," he said. 
In his statement opening the conference, Wagner acknowledged the enormous 
sums at issue. 
"This issue includes the enormous number of dollars in wholesale power that 
have been purchased for PG&E Corp., SoCal Edison and (the state) Department 
of Water Resources, for which the generators have not been paid," Wagner 
said. 
"On the other hand, the state of California alleges that its distribution 
companies and the DWR have been overcharged $9 billion. The amounts involved 
must be, both ways, resolved at the outset to put everyone on the same 
playing field." 
While the state's power grid operator has vowed to press for more money, 
California Gov. Gray Davis has said the state is owed roughly $9 billion 
dollars for overcharges. 
In April, the state's largest utility Pacific Gas and Electric Co., a unit of 
PG&E Corp. , voluntarily filed for protection from creditors due to the 
state's electricity crisis. Southern California Edison (SoCal), a unit of 
Edison International , is trying to avoid the same fate. 
Wagner said if the talks were not successful by July 9, he would make a 
recommendation on refunds and non-payment issues to FERC's five 
commissioners. 
FERC previously ordered about $124 million in refunds for overcharges during 
January and February. 
Last week, FERC expanded a "price mitigation" plan to all 11 Western states 
to curb runaway wholesale prices. The plan fell short of the strict price 
caps sought by California officials and some Democrats, but has been praised 
as a good first step in stabilizing wholesale prices. 
California state officials were to meet later on Monday with Wagner to help 
set an agenda for the settlement talks, Kahn told reporters outside the 
settlement conference. 
The settlement conference was open to the public for the first hour before 
being closed for companies to discuss confidential business information. 
JUDGE LISTS ISSUES 
Wagner said in addition to the refunds and payment issues, there were six 
other matters that must be considered and agreed on by the numerous parties. 
They included the question of how much additional power generation for sale 
should be moved from the spot market to longer-term contracts. 
"This includes both current and future long-term contracts and the length of 
such," Wagner said. 
Other matters listed by the judge were: 
- Resolution of the credit worthiness of power buyers; 
- The independence of the California Independent System Operator board, 
possibly including a reorganization of the state grid operator; 
- Issues concerning intrastate and interstate natural gas transportation and 
the constraints in southern California; 
- Question of whether the settlement should offer immunity from existing and 
future lawsuits and prosecutions against the generators; 
- The issue of the Pacific Gas & Electric bankruptcy. 
(Additional reporting by Chris Baltimore).

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


USA: FPL starts wind farm to power 10,500 Wisc. homes.

06/25/2001
Reuters English News Service
(C) Reuters Limited 2001.

NEW YORK, June 25 (Reuters) - FPL Energy, LLC, a unit of FPL Group Inc. , 
said Monday it began operations at the largest wind-generating power plant in 
Wisconsin, the 30-megawatt (MW) Montfort Wind Farm located west of Madison in 
Iowa County. 
The plant will generate enough electricity to power 10,500 Wisconsin homes, 
FPL said in a statement.
Electricity generated at the facility, in the town of Eden, Wisc., is being 
sold under multi-year contracts to Wisconsin Electric-Wisconsin Gas, a unit 
of Wisconsin Energy Corp. , and Alliant Energy-Wisconsin Power and Light , 
FPL said. 
The facility consists of 20 1.5-MW Enron wind turbines atop 215-foot towers 
outfitted with 110-foot blades. 
Wind trade associations have said that wind power will account for more than 
18,000 MW of capacity worldwide before the end of 2001. 
Wind power and other renewable energy sources like solar and geothermal have 
been spotlighted in recent months as clean alternatives to burning more 
fossil fuels to meet rapidly rising electricity demand. 
FPL Energy is the largest generator of wind power in the U.S. with more than 
1,000 MW of capacity in Iowa, Texas, Minnesota, Wisconsin, Oregon and 
California. 
FPL has a net ownership of approximately 600 MW. 
The company also has four wind projects under construction that will add 
nearly 850 MW to its portfolio by the end of 2001. 
FPL Group's principal subsidiary is Florida Power & Light Co., which serves 
more than 7 million people in Florida. 
- New York Power Desk, 646 223-6074, fax 646 223-6079, e-mail 
Eileen.Moustakis@reuters.com.

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


USA: Calif says power refund demand will top $9 billion.

06/25/2001
Reuters English News Service
(C) Reuters Limited 2001.

WASHINGTON, June 25 (Reuters) - A California official said Monday the state 
will seek "a lot more" than $9 billion in negotiations with generators for 
alleged wholesale electricity overcharges during the past year. 
Michael Kahn, chairman of the California Independent System Operator, the 
entity that runs the state's power grid, told reporters that overcharge 
claims would run much higher than the $8.9 billion previously estimated.
"We are not going to ask FERC (Federal Energy Regulatory Commission) for $9 
billion. We're going to ask for a lot more than that for our litigating 
position," Kahn told reporters outside a closed-door settlement conference at 
FERC. The conference led by FERC Administrative Law Judge Curtis Wagner began 
earlier on Monday in an attempt to reach a settlement. 
Kahn also said that the $8.9 billion overcharge figure previously cited by 
California Governor Gray Davis was "extremely conservative but one that the 
ISO is confident in." State officials would meet later in the day with Judge 
Wagner to help set an agenda for the settlement talks, he said. 
While California claims it was overcharged by electricity generators who 
deliberately pushed prices higher, many of the out-of-state generators claim 
they have not yet been paid for some transactions. The generators - which 
include Enron Corp. , Duke Energy Corp. , Reliant Energy Inc. and Williams 
Cos. - have denied any wrongdoing.

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