Indian State to Make Overdue Payments to Enron in Power Spat
The Wall Street Journal, 04/26/01

ENRON UNIT TERMINATES INDIA POWER CONTRACT
The New York Times, 04/26/01

Indian utility, Enron battle over bills 
Houston Chronicle, 04/26/01

Limited price controls ordered to ease West's power crisis%)
Associated Press Newswires, 04/26/01

Indian State Offers to Review Enron Project, TV Channel Says
Bloomberg, 04/26/01

INDIA: FACTBOX-History of Enron's Dabhol Indian power plant.
Reuters English News Service, 04/26/01

INDIA: FACTBOX-Foreign firms exit as India fights Enron.
Reuters English News Service, 04/26/01

India: Godbole panel may get mandate for renegotiation
Business Line (The Hindu), 04/26/01

India: 'Structural adjustment' loans sought from IBRD
Business Line (The Hindu), 04/26/01

US$384 MLN LIABILITY FOR INDIAN GOVT IF ENRON PROJECT TERMINATED
Asia Pulse, 04/26/01

State wants Enron to continue operations
The Times of India, 04/26/01

Calif.'s energy woes draw diverse plans
The Daily Deal, 04/26/01

Limited price controls ordered to ease West's power crisis
Associated Press Newswires, 04/26/01

US FERC To Approve RTO To Oversee Pacific NW Pwr Grid
Dow Jones Energy Service, 04/25/01

USA: El Paso nipping at Enron's bandwidth heels.
Reuters English News Service, 04/25/01



International
Indian State to Make Overdue Payments to Enron in Power Spat

04/26/2001
The Wall Street Journal
A17
(Copyright (c) 2001, Dow Jones & Company, Inc.)

BOMBAY, India (AP) -- The Maharashtra state power utility said it will pay 
outstanding electricity bills for March as part of a dispute over tariffs 
with U.S. power company Enron Corp. 
"We will make the payment of 1.34 billion rupees [$28.6 million] today for 
the March bill. The February bill of 1.1 billion rupees was already paid up 
last month," Krishna Rao, a member of the Maharashtra State Electricity 
Board, said yesterday. "As far as we are concerned, there are no more 
payments outstanding."
A spokesman for Houston's Enron said it is now due $48 million for nonpayment 
of electricity bills for December and January and is seeking to have the 
issue of outstanding payments resolved through arbitration. The state 
electricity board has said the December and January bills should be offset 
against a fine of four billion rupees that it had levied against Enron for 
nonsupply of power in that period. 
Meanwhile, the state's chief minister, Vilasrao Deshmukh, said a panel will 
be formed in two days to renegotiate a power-purchase agreement, or the rate 
at which the state buys power from Enron. 
Enron has been under fire from Bombay politicians, who say costs have 
increased sharply from the four cents per unit agreed on in 1995 for the 
two-year-old, 740-megawatt naphtha plant. Prices shot up to 15 cents a unit 
after the world-wide fluctuation of oil prices and depreciation of the rupee. 
Enron says a 1,444-megawatt liquefied natural-gas plant to be commissioned 
later this year will lower tariffs. 
Also yesterday, Indian newspapers reported that a proposal by the Enron board 
to issue a termination notice to the state electricity board had been 
temporarily shelved. 
The Enron spokesman said that to his knowledge no one had ever threatened to 
shut down the plant. India's largest foreign investment, the $3 billion 
project has been in trouble since December, when the state government said it 
would review the price agreement with Dabhol Power Corp., Enron's Indian 
subsidiary.

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



Business/Financial Desk; Section C
COMPANY NEWS
ENRON UNIT TERMINATES INDIA POWER CONTRACT
Reuters

04/26/2001
The New York Times
Page 4, Column 1
c. 2001 New York Times Company

The Enron Corporation's troubled Dabhol Power Company authorized the 
termination of a deal to sell power to the western Indian state of 
Maharashtra, the chairman of the state electricity board there said 
yesterday. The chairman, Vinay Bansal, said Dabhol authorized the managing 
director to issue a notice of termination on the contract to sell 740 
megawatts of power in India. Dabhol, which is 65 percent owned by Enron, is 
involved in a payment dispute with the board and is facing a cash squeeze 
because the board has defaulted on payments worth 2.26 billion rupees ($48.31 
million). The decision gives the managing director of Dabhol permission to 
seek the end of the contract at any time, Mr. Bansal said.

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






April 26, 2001
Houston Chronicle
Indian utility, Enron battle over bills 
BOMBAY, India -- The Maharashtra state power utility said Wednesday it would 
pay outstanding electricity bills for March as part of an ongoing dispute 
over tariffs with Houston-based energy giant Enron Corp. 
Krishna Rao, member of the Maharashtra State Electricity Board, said the 
agency would pay 1.34 billion rupees, or $28.5 million, for the March bill. 
The February bill of 1.1 billion rupees, or $23.4 million, was paid last 
month, Rao said. 
"As far as we are concerned, there are no more payments outstanding," Rao 
said. 
An Enron spokesman confirmed receipt of the February dues, but said the 
company is also due $48 million for nonpayment of electricity bills for 
December and January. 
The state electricity board has said the December and January bills should be 
offset against a fine of 4 billion rupees, or $85.31 million, it had levied 
against Enron for nonsupply of power during that period. 
Meanwhile, the state's chief minister, Vilasrao Deshmukh, told reporters a 
committee would be formed in two days to renegotiate a power purchase 
agreement, or the rate at which the state buys power from Enron. 
Enron has been under fire from Bombay politicians who say its power charges 
are unaffordable. Politicians say costs have increased fourfold from 4 cents 
per unit agreed in 1995 for the 2-year-old naphtha plant. 
Houston-based Enron maintains that a larger liquefied natural gas plant to be 
commissioned later this year will lower tariffs. 




Limited price controls ordered to ease West's power crisis%)
By H. JOSEF HEBERT
Associated Press Writer

04/26/2001
Associated Press Newswires
Copyright 2001. The Associated Press. All Rights Reserved.

WASHINGTON (AP) - The Federal Energy Regulatory Commission has agreed to 
limit price controls on California's wholesale electricity markets. But Enron 
spokeswoman Karen Denne said price caps won't help the state's problems this 
summer and calls the FERC decision "unfortunate." 
Federal energy regulators directed limited price controls on California's 
wholesale electricity markets Wednesday, but the order fell short of the 
sweeping price caps California officials have wanted.
FERC voted 2-1 to order that wholesale prices be capped in California when 
electricity reserves fall below 7.5 percent, triggering an emergency alert by 
the state's power grid managers. 
"Price caps will not help california's problem going into summer," Denne 
said. "They neither increase supply or decrease demand. What they will do is 
exacerbate the situation and create additional shortages." 
Denne pointed out that power emergencies, such as Wednesday's Stage 2 alert, 
are becoming routine in California, and will only become more common with 
summer's heat. That would mean price caps could be in effect most of the 
summer. 
California Gov. Gray Davis said earlier Wednesday that he had urged FERC to 
extend the price controls so they would take effect when a Stage 1 alert was 
declared by the California Independent System Operator. A Stage 1 alert means 
electricity reserves have fallen below 7 percent. 
After the order, however, Davis' spokesman Roger Salazar, said the governor 
would not comment until he had a chance to review it in detail. 
"All along we have been asking for meaningful relief. However, in order to 
provide real assistance to the West, federal regulators should impose 
meaningful temporary price caps this summer and next, fulfilling their 
responsibility while California continue to bring additional power plants on 
line," Salazar said Wednesday evening. 
"It doesn't bode well that the one commissioner who knows California best, 
Commissioner (William) Massey, voted against this proposal. We'll be looking 
carefully at this in the morning." 
FERC chairman Curtis Hebert said the order, which came after a day of intense 
negotiations, seeks to "balance" the need to protect against unreasonable 
prices and still encourage investment in power plants and promotion of 
conservation measures. 
But Massey, a Democratic commissioner, said the commission's requirement is a 
"half a loaf solution" to the electricity crisis plaguing California and the 
rest of the West. He said the price controls apply too narrowly and are 
dependent on California's agreeing to join a regional power transmission 
group, something the state has not wanted to do. 
"The order turns into a pumpkin and will have no effect" if California does 
not join the northwest in a joint power transmission system, said Massey. 
Assemblyman Fred Keeley, D-Boulder Creek, called the ruling a mixed blessing. 
"The most important element of the plan is yet to be determined and that is 
the price which is forthcoming in 15 days," Keeley said. 
Keeley said he was concerned that the order continues the "single market 
clearing price" policy, which means the highest bid during the day is the 
price that all the contracts are paid. 
"That's what we have in California right now and it's of considerable 
controversy," he said. "Having that as a Western states' policy is exporting 
a bad idea." 
The order also requires all wholesalers who use the grid to sell their power 
into the market during emergencies, which Keeley said could greatly help fend 
off blackouts. 
Mirant spokesman Brian O'Neel and Duke Energy spokesman Tom Williams said 
their company officials were still reviewing the order. 
Sen. Debra Bowen, chairwoman of the Senate Energy Committee said the order is 
movement and she likes to be optimistic about it. 
"It's not the pot of gold at the end of the rainbow, but it's a help," said 
the Marina del Rey Democrat. "It's a good thing to have done now, in April, 
so we have a little time to see how it operates before we get into the 
summer." 
Bowen said tying price caps to perilously low electricity supplies may also 
spur generators to get hundreds of small power plants back on line to avoid 
the caps. 
The three-member commission struggled all day to craft a price-mitigation 
plan. Three times, a public hearing on the measure was postponed as 
behind-the-scene negotiations continued. Finally, the three commissioners 
emerged and approved the measure, with Massey opposing it. 
Hebert, the Republican chairman, was joined in support of the order by 
commissioner Linda Breathitt, a Democrat. 
Breathitt said that despite Massey's criticism, overall "we have reached a 
consensus that price mitigation should occur" in the California market. 
Under the order price, controls would be triggered only if California grid 
managers declare an emergency because electricity reserves fell to below 7.5 
percent. 
The FERC staff earlier had recommended that price controls only occur in 
so-called Stage 3 emergencies in which there is only a 1.5 percent reserve 
and rolling blackouts are imminent. 
In issuing the order, Hebert reiterated his strong opposition to broader 
price limits based on producers' cost of generation. Reflecting the views of 
the Bush administration, Hebert said he continues to believe "the best 
solution to California problems are market-based solutions." 
However, the commission's action reflects growing pressure on both FERC and 
the Bush administration to take additional action to ease the West's power 
problems, which are expected to become worse this summer as electricity 
demand increases and supplies continue to lag. 
"I think we need price caps all the time not just when we're in an emergency. 
It's the lack of price caps that puts us into emergency situations," said 
Mindy Spatt, a spokeswoman for The Utility Reform Network, a consumer 
watchdog group in San Francisco. 
Earlier this week, a group of Senate Democrats and one Republican from the 
Northwest introduced legislation to require FERC to impose broader price caps 
on electricity markets across the West and peg them to the cost of power 
production. FERC continues to reject such caps. 
The FERC order focuses primarily on California and none of the price- 
mitigation requirements would apply to the Northwest, where some wholesale 
electricity prices have in recent weeks been even higher than those in 
California. 
"Since it's California only, I'm not sure what happens if other states are 
experiencing shortfall and are willing to pay more than the proxy price," 
Bowen said. 
However, FERC did direct that an agency investigation on whether some prices 
have been unreasonably high should be extended from California to other parts 
of the West. Massey said that investigation is far too narrow and will be 
ineffective. 
"We're inventing all of these market manipulations as we go. We'll know after 
a month's experiment what actually happens to price and availability," Bowen 
said. 
--- 
On the Net: 
Federal Energy Regulatory Commission: http://www.ferc.gov 

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


Indian State Offers to Review Enron Project, TV Channel Says
2001-04-26 01:12 (New York)


     Mumbai, April 26 (Bloomberg) -- The Indian state of
Maharashtra has offered to renegotiate the terms of its power
purchase agreement with Enron Corp.'s Dabhol Power Co., the Star
News television channel reported, citing Chief Minister Vilasrao
Deshmukh.
     A tariff dispute has led to the Maharashtra State Electricity
Board, a state-run utility, refusing to pay bills of 3 billion
rupees ($64 million) owed to Dabhol, saying they are too high. The
$3 billion unit of the world's largest energy trader has invoked
counter-guarantees, or guarantees from the government, against the
non-payment.
     Deshmukh said the state is owed 4 billion rupees by Dabhol as
a penalty for failing to supply power when it was needed, the
television channel reported.
     ``We are arranging to settle all undisputed dues,'' Deshmukh
was cited as saying. ``But for the ones that are under dispute, as
in where we owe them and they owe us as well, we can make an
adjustment.''
     The Dabhol board, meeting in London, may not vote to end its
operations in India on the advice of its lenders, the Business
Standard reported, citing unnamed people.
     Dabhol has borrowed about $2 billion from lenders, including
ABN Amro Holding NV, to build the 740-megawatt capacity plant. The
rupee portion of the loan doesn't carry a repayment guarantee from
the government. Dabhol is 65 percent owned by Enron.


INDIA: FACTBOX-History of Enron's Dabhol Indian power plant.

04/26/2001
Reuters English News Service
(C) Reuters Limited 2001.

BOMBAY, April 26 (Reuters) - The board of Dabhol Power Company (DPC), 65 
percent owned by Enron Corp , on Wednesday authorised the management to 
terminate its contract to sell power to the Indian state of Maharashtra. 
The decision follows repeated defaults by the Maharashtra State Electricity 
Board (MSEB) on bills for electricity supplied by Dabhol.
Enron is India's largest foreign investor and is building the country's 
largest power plant with a total capacity of 2,184 MW. The first phase of the 
project with a generating capacity of 740 MW began operating in May 1999. The 
second phase, which will add 1,444 MW of capacity, is expected to be 
completed this year. 
The board's decision empowers the DPC management to issue a notice of 
termination any time it chooses. 
The following traces the history of the troubled project: 
- 

MAY-JUNE, 1992: India invites Enron Corp to explore the possibility of 
building a large power plant in Maharashtra. 
JUNE 20, 1992: Initial Memorandum of Understanding (MoU) signed between Enron 
and Maharashtra government for a plant with capacity of 2000-2,400 MW. The 
Maharashtra State Electricity Board (MSEB) is expected to pick up a 10 
percent stake. 
JAN 2, 1993: India's Foreign Investment Promotion Board (FIPB) clears 
proposal for a 1,920 MW plant, expandable to 2,550 MW. 
DEC 8, 1993: Power Purchase Agreement (PPA) signed between Dabhol Power 
Company (DPC) and MSEB for a 2,015 MW project to be implemented in two 
phases. 
MARCH-JUNE, 1995: Following state elections, a new Maharashtra government, 
headed by the Hindu-nationalist Shiv Sena party, scraps the project, alleging 
corruption and high costs. 
NOV-1995: Project re-negotiated with a final capacity of 2,184 MW. MSEB's 
stake is upped to 30 percent: 15 percent in the first phase, and a further 15 
percent upon completion of the project. 
MAY, 1996: India extends counter-guarantee to the project, under which the 
federal government promises to cover any defaults by the state utility. 
MAY, 1999: Phase one of the project with a capacity of 740 MW begins 
operating. 
JUNE-OCT 2000: Maharashtra government allies demand scrapping the project 
because of the cost of the power it produces. 
OCT, 2000: MSEB defaults on its October payment to DPC. 
DEC, 2000: Maharashtra state announces plan to review the project, stating 
that the tariff is too high. 
JAN, 2001: Enron invokes the Maharashtra government counter-guarantee after 
MSEB defaults on both November and December payments. 
FEB, 2001: Credit Rating Information Services of India Ltd (CRISIL) cuts 
ratings on bonds issued by Maharashtra government due to defaults on payments 
owed to Dabhol. Enron invokes the federal government guarantee. 
APRIL, 2001: Enron issues a notice of arbitration to the Indian government to 
collect on the December bill of 1.02 billion rupees ($21.77 million). 
APRIL, 2001: Enron invokes the political force majeure clause in its contract 
with MSEB, stating that unfavourable political conditions have prevented it 
from fulfilling contractual obligations. 
APRIL 23, 2001: DPC and its lenders meet in London to discuss the payments 
issue. Enron seeks lenders' permission to issue a notice of termination. 
APRIL 25 2001: The board of Dabhol Power Company authorises management to 
terminate the contract any time it chooses. 
($1=46.85 Indian rupees).

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



INDIA: FACTBOX-Foreign firms exit as India fights Enron.

04/26/2001
Reuters English News Service
(C) Reuters Limited 2001.

BOMBAY, April 26 (Reuters) - U.S. energy giant Enron Corp is not the only 
foreign power company to face problems in India. Fed up with red tape and 
legal hassles, four other foreign companies have either pulled out or are 
close to pulling out. 
After more than a decade, India's power sector reforms have generated more 
controversy than investment.
The factbox below describes the travails faced by other foreign power 
companies once interested in investing in India: 
- 

1) COGENTRIX (U.S.) - Repeated litigation and delays in government approval 
forced the U.S. giant to walk out of a project to build a 1,000 MW power 
plant in Karnataka in October 1999. 
2) Electricite de France (EdF) - The French power giant last year scrapped 
plans to take a 15 percent stake in a $1.4 billion, 1,084 MW, project in 
Maharashtra, citing better prospects in other emerging markets. 
3) Daewoo Corp (South Korea) - The Korean chaebol abandoned a 1,070 MW 
project in Chattisgarh last year due to delays in securing key approvals and 
financial problems back home. 
4) PowerGen Plc - The British giant set up two joint ventures in India in the 
early 1990s to build two plants with total capacity of over 1,000 MW. 
Both projects have been delayed as bankers and the state governments have 
been unable to finalise terms for paying for the electricity purchased by the 
cash-strapped state utilities. 
PowerGen is reportedly planning to exit the ventures to concentrate on buying 
a major U.S. utility. 
5) National Power Plc - The British company's joint venture with the 
London-based Hinduja group is still trying to secure clearances for a 1,040 
MW plant in the southern state of Andhra Pradesh. The project was conceived 
more than five years ago.

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


India: Godbole panel may get mandate for renegotiation

04/26/2001
Business Line (The Hindu)
Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - 
Asia Intelligence Wire

MUMBAI, April 25. THE Godbole committee is likely to get the mandate as the 
"expert panel" for renegotiating the power purchase agreement (PPA) with 
Enron, according to sources in Maharashtra State Electricity Board (MSEB). 
The Government had earlier announced that it would set up an expert panel for 
renegotiating the PPA. The Centre has also agreed to be part of the new 
committee. A senior State Government official, confirming the likelihood of 
the Godbole panel getting the mandate, said, "there is one view that the 
panel (Godbole) be appointed to renegotiate the PPA."
However, not all political parties may accept such a move, he added. 
Some quarters want the panel to comprise Ministers and high-level State and 
Union Government officials, he said. 
According to the official, the meeting in Delhi with the Finance Minister had 
helped break the deadlock, with the Centre agreeing to walk alongside 
Maharashtra and MSEB on all issues. 
"The most important breakthrough has been active participation by the Centre 
in problem-solving. We now hope to finally see a solution to all this," he 
said. Representatives of the State Government and MSEB will discuss 
renegotiation of the "entire" power purchase agreement at the DPC board 
meeting to be held in London on Wednesday, the official said. The 
renegotiation committee will be announced in the next 4-5 days. 
"For some time, it appeared the parties were not interested in staying 
together in wedlock. But now, it is likely that a few issues may be thrashed 
out at the board meeting (in London) itself," he said. Sources said the 
decision to set up an expert panel had been communicated to Dabhol Power 
Company. 
A DPC spokesman refused to comment on the matter: "We are still reviewing the 
Godbole committee's report. We would not be in a position to comment until we 
fully understand it. And we are yet to be officially informed of the setting 
up of the new committee. The company is no position to comment on that too." 
Mr Vinay Bansal, Chairman, MSEB, and Mr V.M. Lal, State Energy Secretary, 
will attend the board of directors meeting of DPC to be held in London. 
Our Bureau

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


India: 'Structural adjustment' loans sought from IBRD

04/26/2001
Business Line (The Hindu)
Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - 
Asia Intelligence Wire

NEW DELHI, April 25. THE Power Ministry has sent a proposal to the World Bank 
for seeking 'structural adjustment' loans for the power sector. The loans 
will be utilised to fund the past liabilities of the State electricity boards 
while they undertake reforms. The loans will help the States avert tariff 
shocks to consumers during the transition phase of the reforms - up to the 
time that the States' power sectors are commercially viable. 
Addressing a press gathering here on Wednesday, the Power Minister, Mr Suresh 
Prabhu, said that the State distribution sector tops the Ministry's priority 
list.
With regard to the Enron controversy, Mr Prabhu said that the Centre was keen 
to defuse the crisis. Hence, the Centre agreed to the State's request to 
participate in a negotiating committee consisting of itself, the State 
Government and the Maharashtra State Electricity Board (MSEB). 
The Centre is hopeful that Enron will consider this new development as a move 
to salvage the project in a board meeting in London, according to him. 
Mr Prabhu said that it was realistic for States to commercialise the power 
sector in a period of two years. He said that a particular Chief Minister had 
told him that his State is set to achieve this goal. 
Sources pointed out that the Madhya Pradesh Chief Minister, Mr Digvijay 
Singh, had told Mr Prabhu that the SEB will turn around in another eight 
months. 
Mr Prabhu said that the Power Ministry's committee on one-time settlement of 
SEB dues to the Central power sector undertakings is expected to submit its 
report by the month-end. 
He was confident of the country achieving a capacity addition of 1,00,000 MW 
over the next decade. 
Our Bureau

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


US$384 MLN LIABILITY FOR INDIAN GOVT IF ENRON PROJECT TERMINATED

04/26/2001
Asia Pulse
(c) Copyright 2001 Asia Pulse PTE Ltd.

NEW DELHI, April 26 Asia Pulse - The federal government may have to pay up to 
Rs 18 billion (US$384 million) if the controversy-marred Dabhol power 
project, promoted by US energy giant Enron, is terminated. 
"Our (federal government's) liability, if Dabhol power project was 
terminated, would be one year's electricity bill and a termination fee of 
$300 million," the Power Secretary, A K Basu, said here.
Contractually, the Government of India would have to pay one year's 
electricity bill, totalling at present prices to about Rs 14-15 billion, and 
take over Dabhol Power Company's (DPC) debt, which stands around $300 
million, if the project was terminated, Basu said. 
Both the federal government and the government of the western state of 
Maharashtrahave said they would not be able to absorb the costly DPC power 
and are now seeking renegotiation of the power purchase agreement (PPA) 
including cost and use of power with Enron. 
Enron bills Maharashtra its 740 MW electricity generated from the Dabhol 
power station at the rate of about Rs seven per unit as against around Rs 2.8 
per unit cost of power from the federal government's and State generating 
stations. 
Earlier, the federal Power Minister, Suresh Prabhu, told reporters that the 
federal government would participate in negotiations with Enron to defuse the 
present payment crisis. 
(PTI) 26-04 1753

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


State wants Enron to continue operations
Our Mantralaya Correspondent

04/26/2001
The Times of India
Copyright (C) 2001 The Times of India; Source: World Reporter (TM)

MUMBAI: The Maharashtra government seems to be assiduously persuading Enron 
against folding up its operations in Dabhol, notwithstanding the mounting 
pressure from the PWP, a partner in the eight-party Democratic Front (DF) 
coalition. 
Indications of the state government's kid-glove treatment to Enron became 
apparent when chief minister Vilasrao Deshmukh said on Wednesday, ``Our 
officials attending Enron's board meeting in London will explain to them the 
implications of taking such a harsh decision. They will ask them to desist 
from terminating the project as it will be harmful to both of us.''
Three senior state officials__energy secretary Vinay Mohan Lal, MSEB chairman 
Vinay Bansal and its technical director Prem Paunikar__ are presently in 
London to attend the meeting. 
Addressing a press conference at Mantralaya on Wednesday, the chief minister 
said re-negotiation of the Power Purchase Agreement (PPA) would resolve the 
Enron imbroglio. ``Revision of the PPA is absolutely necessary and even the 
Madhav Godbole committee has suggested that the reopening of the PPA is the 
focal point to settle the long-standing issue,'' Mr Deshmukh said. 
He said the state government would shortly announce the names of the expert's 
committee to be appointed to re-negotiate the PPA with Enron. The committee 
will also include a member of the Union government, Mr Deshmukh said. 
The chief minister said the state government shared the concerns expressed by 
PWP members about the high costs of power purchased from Enron. ``We are 
paying Rs 7.50 per unit of power purchased from Dabol Power Company. Clearly, 
it is expensive and the state government cannot afford to bear this costs. 
For, now it seems to be our fait accompli to pay the huge dues for the power 
taken from DPC,'' he said. 
While admitting that the projections made about power consumption in the 
state while clearing the 1,444 MW second phase of the Enron project have gone 
wrong, Mr Deshmukh said, ``Certain decisions were taken in good faith but the 
projections were not real. We cannot pay such huge costs for purchasing the 
power from Enron.'' 
Asked about the state government's decision to invite fresh objections and 
suggestions on dezoning of the controversial 38 plots in Pune, Mr Deshmukh 
said, ``There is nothing illegal about it. We have acted upon the court's 
suggestion that a fresh notification be issued for the 38 plots.'' 
The chief minister said decision to change the zones of the 38 plots from 
agriculture to residential plots was taken by the previous government and 
that he was not directly responsible for it. 
``It is a normal procedure that certain survey numbers are not included in 
the notification inviting objections and suggestions from the people. But to 
be more transparent in our administration we have accepted the court's 
suggestions and will shortly issue a notifications concerning the 38 plots,'' 
Mr Deshmukh said. 
The chief minister informed mediapersons about a meeting chaired by him in 
the day to review the drought situation in the state. He said instructions 
had been issued to guardian ministers to deal with the water scarcity problem 
on a priority basis.

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


Corporate Restructuring
Calif.'s energy woes draw diverse plans
by Danny Fortson

04/26/2001
The Daily Deal
Copyright (c) 2001 The Deal LLC

The state utilities commission is trying to put in place the rate increase it 
approved to bridge the cost between high wholesale power costs and the price 
PG&E and SoCalEd can charge. 
The California Public Utilities Commission is scrambling to put in place the 
rate increase it approved in March to bridge the gap between high wholesale 
power costs and the prices the state's troubled utilities, PG&E Co. and 
Southern California Edison, can charge their customers.
But there remain serious questions as to who will carry the increased 
financial burden and whether more rate increases will be necessary. 
PG&E and SoCalEd have run up nearly $14 billion in debts since last summer, 
partially because of the state's rate structure. Many involved in the case 
think that the 3-cents-per-kilowatt-hour increase the CPUC approved in March 
falls far short of an ultimate resolution. 
"This is very ugly," said William Booth, a lawyer representing California 
Large Energy Consumers Association, a business group comprising primarily 
concrete and steel companies that are heavy power users. "I don't think this 
3-cent increase is the end." 
In an evidentiary hearing held before administrative law judge Christine 
Walwyn in San Francisco on Tuesday, the CPUC presented three expert witnesses 
to weigh in on how they think the 3-cent-per-kilowatt-hour increase should be 
implemented. They were met by no less than 15 lawyers representing varied 
interests. 
Among them: PG&E Co., Southern California Edison, public interest group The 
Utility Reform Network, Enron Energy Services, Office of Ratepayer Advocates 
and the California Large Energy Consumers Association. 
At issue is the so-called rate-design of the increase, which has two main 
goals: one, to account for the shortfall between revenue and the price 
utilities must pay to procure power, the other, to distribute the increase 
across rate-paying groups to impel the greatest total conservation in the 
energy-strapped state. 
In other words, the commission is looking to identify the groups with the 
most elastic demand for energy. While the higher rates would compel them to 
reduce usage, it would not likely put them out of business. 
But all parties seemed to be aware of the need to balance the urgency to 
solve the current crisis with the necessity for a sound and balanced 
long-term structure. The commission is under the gun: A June 1 deadline 
compels it to complete in a matter of weeks a process that generally takes 
several months. 
The commission set that date to address the rising demand that occurs in the 
summer months, when energy use surges alongside the prices charged on the 
wholesale spot market. Further confusing the matter: Both California Gov. 
Gray Davis and PG&E Co. have proposed differing rate structure plans. 
"We absolutely have to have this increase by summer," said J.P. Shotwell, 
senior attorney for SoCal Edison. "We will do whatever we can to accommodate 
the schedule." 
Among the many ideas batted around in the hearing was a real-time pricing 
scheme for large commercial users, which would directly subject them to the 
wholesale power prices at certain peak periods during the summer. That 
proposal was put forward by Severin Borenstein, the director of the 
University of California Energy Institute and one of the witnesses called on 
by the Commission. 
Echoing what many involved in the case felt, Borenstein said that the hearing 
is too narrowly focused and fails to address the overarching issues. Last 
summer, wholesale costs swung wildly from as low as $60 per megawatt hour to 
as high as $900 per megawatt hour. 
"I think it's a real mistake," Borenstein said. "This is too focused on 
allocating the pain rather than looking at the problem as a whole." 
How to beat the high cost of electricity The California Public Utilities 
Commission is scrambling to make a June 1 deadline for the creation of a rate 
plan that will bridge the gap between the high cost of producing electricity 
and the rates PG&E and SoCalEd are allowed to charge consumers. 
Company: PG&E Corp. 
CEO: Robert Glynn Jr. 
Headquarters: San Francisco 
Market cap: $5.63 billion 
Company: Edison International Co., parent of Southern California Edison Co. 
CEO: John Bryson 
Headquarters: Rosemead, Calif. 
Market cap: $3.67 billion 
Date Action 
8/04/00 Energy 
http://www.thedeal.com/cgi-bin/gx.cgi/AppLogic+FTContentServer?pagename=Future
 Tense/Apps/Xcelerate/Render&c=TDDArticle&cid=A26747-2000Aug4&preview=true 
California power companies and consumers 
1/05/01 Edison International announces layoff of 1,450 workers due to the 
energy crunch 
1/08/01 
Gov. Gray Davis pledges $1 billion for power measures but avoids direct 
utilities bailout 
Edison wins a federal suit to recover costs incurred by purchase of power for 
its customers 
1/10/01 PG&E says it cannot raise cash, asks Davis to intervene 
1/11/01 
http://www.edisonnews.com/releasesexe/01-007.htm, allowing state and federal 
assistance 
PG&E CEO outlines bankruptcy risks 
1/16/01 
SoCalEd 
http://www.thedeal.com/cgi-bin/gx.cgi/AppLogic+FTContentServer?pagename=Future
 Tense/Apps/Xcelerate/Render&c=TDDArticle&cid=TDDF0ZI32IC&preview=true in 
payments 
PG&E 
http://www.thedeal.com/cgi-bin/gx.cgi/AppLogic+FTContentServer?pagename=Future
 Tense/Apps/Xcelerate/Render&c=TDDArticle&cid=TDDF0ZI32IC&preview=true 
bankruptcy 
1/19/01 
$400 million 
http://www.thedeal.com/cgi-bin/gx.cgi/AppLogic+FTContentServer?pagename=Future
 Tense/Apps/Xcelerate/Render&c=TDDArticle&cid=TDDCR2XD6IC&preview=true from 
bankruptcy 
Capital Re's 
http://www.thedeal.com/cgi-bin/gx.cgi/AppLogic+FTContentServer?pagename=Future
 Tense/Apps/Xcelerate/Render&c=TDDArticle&cid=TDDEL4XD6IC&preview=true by 
California power investments 
1/23/01 President Bush extends federally mandated sale of surplus electric 
and gas to California 
1/24/01 
http://www.thedeal.com/cgi-bin/gx.cgi/AppLogic+FTContentServer?pagename=Future
 Tense/Apps/Xcelerate/Render&c=TDDArticle&cid=TDDDGDKYEIC&preview=true for 
long-term power from suppliers 
1/26/01 Judge blocks California Power Exchange from seizing PG&E assets 
1/31/01 
Investors confident 
http://www.thedeal.com/cgi-bin/gx.cgi/AppLogic+FTContentServer?pagename=Future
 Tense/Apps/Xcelerate/Render&c=TDDArticle&cid=TDDII1WSMIC&preview=true from 
crisis 
California Senate 
http://www.thedeal.com/cgi-bin/gx.cgi/AppLogic+FTContentServer?pagename=Future
 Tense/Apps/Xcelerate/Render&c=TDDArticle&cid=TDD73BWSMIC&preview=true 
2/01/01 
Energy 
http://www.thedeal.com/cgi-bin/gx.cgi/AppLogic+FTContentServer?pagename=Future
 Tense/Apps/Xcelerate/Render&c=TDDArticle&cid=TDD4MCS8OIC&preview=true 
production 
California 
http://www.thedeal.com/cgi-bin/gx.cgi/AppLogic+FTContentServer?pagename=Future
 Tense/Apps/Xcelerate/Render&c=TDDArticle&cid=TDDBFF6QPIC&preview=true energy 
bill 
2/07/01 Scottish Power's 
http://www.thedeal.com/cgi-bin/gx.cgi/AppLogic+FTContentServer?pagename=Future
 Tense/Apps/Xcelerate/Render&c=TDDArticle&cid=TDDCQRZSWIC&preview=true 
purchase 
2/09/01 
http://www.thedeal.com/cgi-bin/gx.cgi/AppLogic+FTContentServer?pagename=Future
 Tense/Apps/Xcelerate/Render&c=TDDArticle&cid=TDDG4TX00JC&preview=true with 
utilities 
2/16/01 California 
http://www.thedeal.com/cgi-bin/gx.cgi/AppLogic+FTContentServer?pagename=Future
 Tense/Apps/Xcelerate/Render&c=TDDArticle&cid=TDDZV1VU9JC&preview=true 
3/08/01 
Calif. 
http://www.thedeal.com/cgi-bin/gx.cgi/AppLogic+FTContentServer?pagename=Future
 Tense/Apps/Xcelerate/Render&c=TDDArticle&cid=TDDZ5YHQ2KC&preview=true with 
power producers 
California independent system operator proposes price cap 
3/15/01 
http://www.thedeal.com/cgi-bin/gx.cgi/AppLogic+FTContentServer?pagename=Future
 Tense/Apps/Xcelerate/Render&c=TDDArticle&cid=TDDIKJE3CKC&preview=true if 
creditors collect on liens 
3/18/01 
http://www.thedeal.com/cgi-bin/gx.cgi/AppLogic+FTContentServer?pagename=Future
 Tense/Apps/Xcelerate/Render&c=TDDArticle&cid=TDDRPUX6HKC&preview=true to 
California utility unit 
4/04/01 
http://www.thedeal.com/cgi-bin/gx.cgi/AppLogic+FTContentServer?pagename=Future
 Tense/Apps/Xcelerate/Render&c=TDDArticle&cid=TDD4V6ER4LC&preview=true on 
Edison International's defaulted credit lines for another couple of weeks 
4/06/01 
http://www.thedeal.com/cgi-bin/gx.cgi/AppLogic+FTContentServer?pagename=Future
 Tense/Apps/Xcelerate/Render&c=TDDArticle&cid=TDDF8YMI7LC&preview=true for 
bankruptcy 
4/09/01 
California reaches an 
http://www.thedeal.com/cgi-bin/gx.cgi/AppLogic+FTContentServer?pagename=Future
 Tense/Apps/Xcelerate/Render&c=TDDArticle&cid=TDDFUVKWBLC&preview=true assets 
at a 2.3 x premium from SoCal Ed to save the utility from bankruptcy 
Standard & Poors downgrades PG&E's credit rating after bankruptcy filing 
4/10/01 Analysts are 
http://www.thedeal.com/cgi-bin/gx.cgi/AppLogic+FTContentServer?pagename=Future
 Tense/Apps/Xcelerate/Render&c=TDDArticle&cid=TDDKDY8ZDLC&preview=true, 
noting consumers will be left holding the bill 
4/25/01 The California Public Utilities Commission has until June 1 to bridge 
the gap between the rising cost of producing electricity and the capped rate 
that California energy producers are allowed to charge consumers 
Source: The Deal 
http://www.thedeal.com

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


Limited price controls ordered to ease West's power crisis
By H. JOSEF HEBERT
Associated Press Writer

04/25/2001
Associated Press Newswires
Copyright 2001. The Associated Press. All Rights Reserved.

WASHINGTON (AP) - Federal energy regulators directed limited price controls 
on California's wholesale electricity markets Wednesday, but the order fell 
short of the sweeping price caps California officials have wanted. 
The Federal Energy Regulatory Commission voted 2-1 to order that wholesale 
prices be capped in California when electricity reserves fall below 7.5 
percent, triggering an emergency alert by the state's power grid managers.
California Gov. Gray Davis said earlier Wednesday that he had urged FERC to 
extend the price controls so they would take effect when a Stage 1 alert was 
declared by the California Independent System Operator. A Stage 1 alert means 
electricity reserves have fallen below 7 percent. 
After the order, however, Davis' spokesman Roger Salazar, said the governor 
would not comment until he had a chance to review it in detail. 
"All along we have been asking for meaningful relief. However, in order to 
provide real assistance to the West, federal regulators should impose 
meaningful temporary price caps this summer and next, fulfilling their 
responsibility while California continue to bring additional power plants on 
line," Salazar said Wednesday evening. 
"It doesn't bode well that the one commissioner who knows California best, 
Commissioner (William) Massey, voted against this proposal. We'll be looking 
carefully at this in the morning." 
FERC chairman Curtis Hebert said the order, which came after a day of intense 
negotiations, seeks to "balance" the need to protect against unreasonable 
prices and still encourage investment in power plants and promotion of 
conservation measures. 
But Massey, a Democratic commissioner, said the commission's requirement is a 
"half a loaf solution" to the electricity crisis plaguing California and the 
rest of the West. He said the price controls apply too narrowly and are 
dependent on California's agreeing to join a regional power transmission 
group, something the state has not wanted to do. 
"The order turns into a pumpkin and will have no effect" if California does 
not join the northwest in a joint power transmission system, said Massey. 
Assemblyman Fred Keeley, D-Boulder Creek, called the ruling a mixed blessing. 
"The most important element of the plan is yet to be determined and that is 
the price which is forthcoming in 15 days," Keeley said. 
Keeley said he was concerned that the order continues the "single market 
clearing price" policy, which means the highest bid during the day is the 
price that all the contracts are paid. 
"That's what we have in California right now and it's of considerable 
controversy," he said. "Having that as a Western states' policy is exporting 
a bad idea." 
The order also requires all wholesalers who use the grid to sell their power 
into the market during emergencies, which Keeley said could greatly help fend 
off blackouts. 
Mirant spokesman Brian O'Neel and Duke Energy spokesman Tom Williams said 
their company officials were still reviewing the order. 
Enron spokeswoman Karen Denne called FERC's decision "unfortunate." 
"Price caps will not help california's problem going into summer," Denne 
said. "They neither increase supply or decrease demand. What they will do is 
exacerbate the situation and create additional shortages." 
Denne pointed out that power emergencies, such as Wednesday's Stage 2 alert, 
are becoming routine in California, and will only become more common with 
summer's heat. That would mean price caps could be in effect most of the 
summer. 
Sen. Debra Bowen, chairwoman of the Senate Energy Committee said the order is 
movement and she likes to be optimistic about it. 
"It's not the pot of gold at the end of the rainbow, but it's a help," said 
the Marina del Rey Democrat. "It's a good thing to have done now, in April, 
so we have a little time to see how it operates before we get into the 
summer." 
Bowen said tying price caps to perilously low electricity supplies may also 
spur generators to get hundreds of small power plants back on line to avoid 
the caps. 
The three-member commission struggled all day to craft a price-mitigation 
plan. Three times, a public hearing on the measure was postponed as 
behind-the-scene negotiations continued. Finally, the three commissioners 
emerged and approved the measure, with Massey opposing it. 
Hebert, the Republican chairman, was joined in support of the order by 
commissioner Linda Breathitt, a Democrat. 
Breathitt said that despite Massey's criticism, overall "we have reached a 
consensus that price mitigation should occur" in the California market. 
Under the order price, controls would be triggered only if California grid 
managers declare an emergency because electricity reserves fell to below 7.5 
percent. 
The FERC staff earlier had recommended that price controls only occur in 
so-called Stage 3 emergencies in which there is only a 1.5 percent reserve 
and rolling blackouts are imminent. 
In issuing the order, Hebert reiterated his strong opposition to broader 
price limits based on producers' cost of generation. Reflecting the views of 
the Bush administration, Hebert said he continues to believe "the best 
solution to California problems are market-based solutions." 
However, the commission's action reflects growing pressure on both FERC and 
the Bush administration to take additional action to ease the West's power 
problems, which are expected to become worse this summer as electricity 
demand increases and supplies continue to lag. 
"I think we need price caps all the time not just when we're in an emergency. 
It's the lack of price caps that puts us into emergency situations," said 
Mindy Spatt, a spokeswoman for The Utility Reform Network, a consumer 
watchdog group in San Francisco. 
Earlier this week, a group of Senate Democrats and one Republican from the 
Northwest introduced legislation to require FERC to impose broader price caps 
on electricity markets across the West and peg them to the cost of power 
production. FERC continues to reject such caps. 
The FERC order focuses primarily on California and none of the price- 
mitigation requirements would apply to the Northwest, where some wholesale 
electricity prices have in recent weeks been even higher than those in 
California. 
"Since it's California only, I'm not sure what happens if other states are 
experiencing shortfall and are willing to pay more than the proxy price," 
Bowen said. 
However, FERC did direct that an agency investigation on whether some prices 
have been unreasonably high should be extended from California to other parts 
of the West. Massey said that investigation is far too narrow and will be 
ineffective. 
"We're inventing all of these market manipulations as we go. We'll know after 
a month's experiment what actually happens to price and availability," Bowen 
said. 
--- 
On the Net: 
Federal Energy Regulatory Commission: http://www.ferc.gov

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


US FERC To Approve RTO To Oversee Pacific NW Pwr Grid

04/25/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

WASHINGTON -(Dow Jones)- Federal regulators Wednesday approved a plan to 
create a new entity to independently administer competitive access to the 
Pacific Northwest's power grid, which is dominated by the federally owned 
Bonneville Power Administration's transmission system. 
The U.S. Federal Energy Regulatory Commission unanimously accepted the 
so-called RTO West proposal, which would create one of the largest regional 
transmission organizations yet.
FERC regulators welcomed the plan as a significant milestone in the 
commission's ambitious program to radically reshape the U.S. interconnected 
power grid. 
The commission's Order No. 2000 is designed to create large regional RTOs 
throughout the U.S. to independently manage transmission assets, with twin 
goals of promoting more robust competitive power markets while assuring grid 
reliability. 
Bonneville's transmission system represents more than three-quarters of the 
grid assets to be administered by RTO West. The U.S. Department of Energy 
power marketing agency is a major player in the Pacific Northwest and 
California power markets due to its massive portfolio of hydropower 
generation. 
Joining Bonneville in the effort are a number of investor-owned utilities: 
Avista Corp. (AVA), Enron Corp.'s Portland General Electric Co. (ENE), 
Idacorp Inc.'s Idaho Power Co. (IDA), Montana Power Corp. (MTP), Scottish 
Power's PacifiCorp (SPI), Puget Sound Energy Inc. (PSDC) and (Sierra Pacific 
Resources (SRP). 
The utilities will turn their assets over to independent management by the 
non-profit RTO, and create a for-profit transmission company within the RTO 
under a hybrid arrangement. 
The non-profit entity also will allow many of the region's municipally owned 
utilities to participate. 

FERC approved the plan's governance, scope and configuration subject to 
certain modifications, and directed the RTO to pursue expansion to include 
the California Independent System Operator and Canadian interests. 
In a separate power-price mitigation order, FERC directed the California ISO 
to make an RTO filing by June 1. If not, the price-mitigation plan ordered 
for California will end. 
The order requires RTO West to report back by Dec. 1 on its efforts to expand 
its geographic scope. 
FERC accepted the governance arrangement for TransConnect, the for-profit 
transmission company to be formed by the participating investor-owned 
utilities, and authorized the company to file for incentive rates available 
under FERC's RTO policy. 
RTO West is the largest RTO yet approved by the commission geographically. It 
will oversee transmission lines in eight states and 580,000 square miles of 
territory. 
Energy Secretary Spencer Abraham roundly endorsed RTO West Tuesday in a press 
release urging FERC to accept the plan. 
"It is important that we develop solutions that provide reliable transmission 
service to the citizens of the region," Abraham said in an implicit reference 
to the Pacific Northwest's highly volatile electricity market, partly a 
result of California's high-profile power market meltdown. 
The plan involves the first RTO encompassing a DOE power marketing agency, 
and further, will allow the region's municipal utilities to participate, 
Abraham noted. 
DOE released a copy of an April 23 letter Abraham sent to FERC Chairman Curt 
Hebert, urging approval of RTO West as part of a stepwise approach toward 
promoting seamless competitive transmission access throughout the Western 
U.S. 
The letter touched on the debate among FERC's three sitting members over how 
to promote a single, so-called "West-wide" RTO to govern the entire Western 
interconnection, including California and the Desert Southwest. 
"I am aware that some believe a single RTO in the Western United States is a 
better solution than the regional approach proposed," Abraham said in the 
letter to Hebert. 
"The department supports the development of seamless electricity markets. 
However, we believe the best way to achieve this goal is to take thoughtful 
first steps that the region can support," Abraham said, noting the RTO West 
plan embodies such a stepwise development. 
"As a practical matter, this approach may be necessary in the Northwest to 
maintain support for an RTO, given the fears that California's problems will 
be imported to a West-wide RTO," the letter to Hebert continued. 
"I believe the best way to achieve the balance between a healthy Western 
electricity market and regional (power-grid) reliability needs is to create 
strong regional RTOs and allow them to develop seamless market interfaces." 
Commissioner William Massey, who has long advocated creation of a "West-wide 
RTO" encompassing RTO West, California and the Desert Southwest, supported 
the order. 
RTO West will serve as "an anchor" for the ultimate formation of such a 
West-wide RTO. 
FERC Chairman Curt Hebert praised the action as a significant development in 
the commission's RTO implementation effort. RTO West should provide an 
important part of a solution to the electricity supply problems plaguing the 
region, he said. -By Bryan Lee, Dow Jones Newswires, 202-862-6647, 
bryan.lee@dowjones.com

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


USA: El Paso nipping at Enron's bandwidth heels.
By C. Bryson Hull

04/25/2001
Reuters English News Service
(C) Reuters Limited 2001.

HOUSTON, April 25 (Reuters) - El Paso Corp. on Wednesday emerged as one of 
the most active bandwidth trading players after announcing new trading 
numbers and the acquisition of a new network connection facility. 
El Paso Global Networks, the Houston-based company's telecom unit, completed 
395 bandwidth trades in the first quarter of 2001, more than double the 160 
it consummated in the previous quarter, unit President Greg Jenkins told 
analysts Wednesday during a conference call.
Bandwidth trading pioneer and market leader Enron Corp. by contrast cut 580 
transactions in the first quarter of this year, and 321 in the quarter 
before. 
"There is no doubt El Paso Energy is the No. 2 player now in the bandwidth 
commodity market. Their growth in transactions is pretty much a similar 
ramp-up to what we saw with Enron," Salomon Smith Barney analyst Raymond 
Niles said. 
Jenkins said the contracts varied widely in length, from 30 days to 18 years, 
and encompassed a number of different players. 
"The majority of the transactions done in the first quarter were done with 
telecommunications companies, either other carriers or other service 
providers in the telecom industry," Jenkins said, noting that non-telecom 
players also increased. 
That belies some of the primary criticism of bandwidth trading naysayers, 
Niles said. 
"A lot of people are running around saying these guys are just trading with 
each other. Enron last week was the first to say that is not true, and El 
Paso is confirming it," he said. 
Gas and power convergence companies like El Paso, Enron, Dynegy Inc. and The 
Williams Cos. are the early players in the market for trading bandwidth, or 
network capacity. All four believe the commodity market for bandwidth could 
eventually be bigger than their operations in gas and power. 
But before that can happen, the companies must develop a liquid marketplace 
through which bandwidth can easily be transferred from one party to another. 
BUYS NEW NETWORK FACILITY 
To that end, El Paso on Wednesday announced the acquisition of the Lakeside 
Technology Center in Chicago, a telecommunication carrier hotel, from equity 
investment firm The Carlyle Group. 
"It's a perfect example of how we blend capital market, commodity market and 
telecom expertise to transform this industry into a more efficient 
marketplace," Jenkins said. 
El Paso declined to say how much it paid, but a source close to the deal 
indicated it was in excess of $100 million. Carlyle and El Paso will also 
jointly develop interconnection facilities in San Jose, Los Angeles and New 
York. 
A carrier hotel is a physical facility where network carriers and service 
providers can more easily connect their networks to one another. Inside is an 
interconnection facility that acts like an electronic rail-switching yard for 
bandwidth networks. 
"The idea for bandwidth trading is to form the interconnections that will 
permit trading, because right now, the interconnections are very clunky," 
Niles said. 
A real-time trading market will require instantaneous network switching, not 
technicians snaking cables from one network to another, he said. 
Enron already has built 25 separate pooling points worldwide, 18 of which are 
in the U.S., to meet that end. On Wednesday it offered open access at those 
pooling points to qualified trading partners. 
El Paso Global Networks plans to spend $2 billion to build its bandwidth 
network, and expects to turn a profit by 2003. 
In the first quarter, El Paso more than doubled its metro fiber miles, or 
miles of wires within cities, to 15,000 from 6,700, Jenkins said.

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