BANDWIDTH BEAT: Master Trading Agreement 3.0
Dow Jones Energy Service, 04/16/01

Sierra Pacific Shares Slump After Utility Suspends Dividend
Dow Jones Business News, 04/16/01

Energy Traders Raise Ante In Power-hungry California
Dow Jones Energy Service, 04/16/01

Independent Power Producers Expect to Meet or Exceed Forecasts
Dow Jones Business News, 04/16/01

Seattle City Utility Racks Up $92 Million in Power Purchases in March
KRTBN Knight-Ridder Tribune Business News: The Seattle Times - Washington, 
04/16/01

Sierra Pacific Shares Fall After Dividend Canceled (Update2)
Bloomberg, 04/16/01



BANDWIDTH BEAT: Master Trading Agreement 3.0

04/16/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

. By Michael Rieke 
. A Dow Jones Newswires Column . 

HOUSTON -(Dow Jones)- Carriers and trading companies worked for more than 
nine months last year, missed four deadlines and couldn't produce a master 
bandwidth trading agreement.
Now they seem to be coming out with something new every other month or so. 
Since mid-December, two master trading agreements have been posted on the 
Competitive Telecommunications Association Web site, and there's a third one 
circulating. Who's behind it, however, is a mystery. 
The first thing to understand in a discussion of master trading agreements 
for the bandwidth market is that few, if any, sources want to be quoted on 
the subject. 
Enron Corp. (ENE) and Williams Communications Group (WCG) are about the only 
companies willing to have their names attached to a trading contract. But 
it's safe to assume that at least El Paso Corp. (EPG), Utilicorp United Inc. 
(UCU) unit Aquila, Koch Industries and Reliant Energy Inc. (REI) worked with 
Enron on first contract. Universal Access Inc. (UAXS) and unnamed carriers 
are said to have worked with Williams on the second. 
The new contract is being referred to in the market as the "Universal Access" 
contract. 
"This is not a Universal Access contract," Pam Whitehead, vice president of 
global bandwidth markets for Universal Access, told Bandwidth Beat. Her 
company was one of about 10 carriers that worked on the third contract, she 
said. 
When asked for a copy of the third contract, Whitehead referred Bandwidth 
Beat to CompTel, saying she was sure the group had a copy. 
Another source, when asked for a copy of the third contract, said, "Why don't 
you talk to Pam? It's her document." Less Firm Or More Flexible? 

The third contract is "less firm" than the other two contracts, people in the 
trading market said. But a person who worked on it described it in a way that 
makes it sound more flexible than the other two. 
"It does have a check box on the front that allows you to totally opt out of 
the firmness that's described (in the contract), said the source. "But if you 
don't check that box, it's completely firm." 
Firm contracts leave parties liable for damages if the terms aren't met, and 
trading companies say bandwidth has to be traded on a firm basis for the 
market to work. Carriers, on the other hand, say the best-efforts basis on 
which they've always done business should be fine for bandwidth trading as 
well. 
This split has frustrated attempts to create a common contract. But the whole 
debate over firm versus best-efforts is at least a little bogus. 
Despite traders' hard-line position, there's always room for flexibility in 
markets. When Enron buys natural gas, it doesn't always use a firm contract. 
If it's going to resell the gas under an interruptible - or best-efforts - 
contract, it doesn't need to buy with a firm contract. 
In the winter, when delivery of gas is crucial, 95% of the business is done 
with firm contracts, a veteran gas trader told Bandwidth Beat. In the summer, 
when delivery isn't so crucial, 75% of the business is done with firm 
contracts. Special Deals No One Talks About 

When carriers say they've always done business on a best-efforts basis, 
they're not telling the whole truth either. Case in point are individual case 
basis, or ICB, contracts. 
ICB contracts aren't standardized. A buyer can get just about anything in an 
ICB deal, including firm delivery, but the buyer can't tell anyone about it. 
The arrangements are private and confidential. 
So who can get ICB contracts? It's determined by how much a buyer is 
spending, how much he knows about the market and how good he is at 
negotiating, Ron Harden, director and chief operating officer of PointOne 
Telecommunications in Austin, Texas, told Bandwidth Beat. 
"You can always get an ICB deal if you push them hard and ... if you know 
where the market is priced," he said. 
So energy traders don't always do business on a firm basis, and carriers 
don't always do business on a best-efforts basis. 
But there's no arguing that fact that trading with a firm contract makes any 
market, including the telecom market, more efficient. Buyers need to know 
when their crucial orders will be filled. 
Now let's go back to the fact that, at least on the carriers side of the 
argument, companies don't want their names associated with the effort to 
produce a standard trading agreement. 
The reluctance stems from internal and external concerns. Carriers' 
traditional sales staff fear bandwidth trading could cause them to lose 
customers and bonuses to their company's bandwidth trading desk. And carriers 
hoping to do business with both other carriers and trading companies don't 
want to endanger their relations with either group. 
But Jon Merriman, president and chief executive of RateXchange Corp. (RTX), 
has predicted that carriers won't always shy from being mentioned in 
connection with bandwidth trading. Sometime soon a telecom analyst will put a 
buy rating on a carrier that uses the bandwidth market to sell unused network 
capacity and increase its revenues, giving companies an incentive to open up, 
Merriman said. 
We'll see how long that takes. 
On the Web: http://www.CompTel.org 
-By Michael Rieke, Dow Jones Newswires; 713-547-9207; michael.rieke@wsj.com

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


Sierra Pacific Shares Slump After Utility Suspends Dividend
By Elena Molinari

04/16/2001
Dow Jones Business News
(Copyright (c) 2001, Dow Jones & Company, Inc.)

Dow Jones Newswires 
NEW YORK --- Interpreting Sierra Pacific Resources' suspension of its 
dividend payment as a sign of poor financial health, investors sold off 
shares of the utility on Monday.
At 4 p.m., shares of Sierra Pacific (SRP) were off $1.21, or 8.3%, to $13.29 
after earlier falling by as much as 12% in New York Stock Exchange trading. 
Sierra Pacific, which owns two Nevada utilities, said last week it cancelled 
the dividend payment scheduled for May 1. The company cited high power costs 
and other fallout from the energy crisis afflicting the western part of the 
U.S. 
The move will save the Reno, Nev.-based utility less than $20 million, it 
said. The dividend policy will be reviewed at the next board meeting May 21, 
the company added. 
Sierra Pacific has paid a quarterly dividend of 25 cents a share in recent 
quarters. 
Caught between regulated retail electric prices and rising wholesale energy 
costs, Sierra Pacific's situation is similar to that of California utility 
PG&E Corp., which filed for bankruptcy protection on April 6. 
"The company's earnings in the past few quarters have been hurt severely by 
the high cost of wholesale electric power," said Barry Abramson, an analyst 
with UBS Warburg. "Even though the company has been allowed to gradually 
increase its retail electric rates each month, these rate hikes have not kept 
up with the cost of power." 
Sierra Pacific received relief in February when the Nevada Public Utilities 
Commission approved a 17 percent rate increase, equal to about $300 million 
of additional revenue. 
The company said it still hopes to complete a $2 billion agreement to 
purchase Enron Corp.'s Portland General Electric unit. The transaction, which 
will also include the assumption of $1 billion in debt, has been delayed 
partly because of a new California law that has blocked Sierra Pacific from 
raising funds through planned sales of certain power-generating assets. 
Copyright (c) 2001 Dow Jones & Company, Inc. 
All Rights Reserved.

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


Energy Traders Raise Ante In Power-hungry California

04/16/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

NEW YORK (AP)--In Houston, it's known as "the power corner." Separated by 
just a few city blocks, four major power wholesalers run trading exchanges 
that have a strong influence on energy prices nationwide. 
The trading floors run by Enron Corp. (ENE), Reliant Energy Inc. (REI), 
Dynegy Inc. (DYN) and Duke Energy Corp. (DUK) represent ground zero in a 
power crisis threatening the quality of life in much of the western United 
States this summer.
By seizing upon opportunities created by deregulation, the energy traders 
have turned up the juice in the electricity business in ways similar to how 
junk bond traders ignited Wall Street in the 1980s and venture capitalists 
fueled Silicon Valley last decade. 
And thanks to an exemption granted in the early 1990s, nobody monitors daily 
trading to detect unfair or illegal practices. 
Utility bills in California have gone up nearly fourfold in the past year, to 
$27.1 billion. Without fundamental changes in the energy market, this year's 
bill will rise to $70 billion -more than $2,000 for every person in the 
state, according to operators of the state's power grid. 
The staggering electricity price increases have pushed the state's largest 
utility, Pacific Gas and Electric, into bankruptcy and left No. 2 Southern 
California Edison on the brink of insolvency. California's once-ample budget 
surplus also has shriveled, as the state is spending about $50 million a day 
to buy enough power to keep the lights on. 
The energy wholesalers say they're doing nothing wrong. 
They blame the high prices on the rising price of natural gas, burned to 
generate electricity, and the state's botched deregulation plan. By failing 
to line up reliable power ahead of time and by imposing price caps for 
consumers, the state put itself into this mess, the companies say. 
"There have been accusations of wrongdoing for eight months now and there 
isn't a shred of evidence to support the allegations," said Gary Ackerman, 
executive director of the Western Power Trading Forum, a Menlo Park, Calif., 
trade group. "People are very angry and frustrated about electricity right 
now and attorneys are trying to take that anger out on us." 

Anti-trust Probes 

Attorneys general in Washington, Oregon and California are probing whether 
the wholesalers have violated antitrust laws or engaged in unfair business 
practices. A California state senate committee may issue subpoenas for 
records and the testimony of top energy executives, and at least five 
lawsuits accuse energy companies of market abuses. 
"This is the best fraud I have ever seen," attorney Michael Aguirre of San 
Diego, who is involved in one of the class-action suits. "The generators are 
doing everything that you think that they might be doing, only it's worse 
than you ever imagined." 
The lawsuits and investigations allege that generators have conspired to 
hijack billions of dollars from consumers and taxpayers by withholding 
electricity from energy-starved California until the last minute, and then 
supplying it at exorbitant prices. 
At Enron's headquarters in Houston, energy specialists among the company's 
1,500 traders swap electricity and natural gas contracts like stocks and 
bonds. Mathematicians, meteorologists and economists make complex 
calculations to identify where to buy the cheapest power and where to deliver 
it at the greatest profit. 
"They are extremely good at what they do," said Severin Borenstein, director 
of the University of California at Berkeley's energy institute. 
The Internet has provided the traders with the tools to do their jobs even 
better. Online marketplaces and password-protected exchanges provide them 
with invaluable real-time information on the buying and selling patterns of 
their rivals. 
Two lawsuits allege that traders have parlayed the sensitive information 
collected online to fix prices artificially high, a violation of antitrust 
laws. 
Aguirre has spent six months assembling reams of data about traders and their 
activities, but he has yet to develop concrete evidence to prove his 
price-fixing allegations. 

A March 21 report by California's electricity grid managers concluded that, 
between last May and November, 98% of trading bids were driven up by 
noncompetitive patterns of behavior. 
The California Independent System Operator report stopped short of accusing 
wholesalers of illegal market manipulation, but it did determine that the 
wholesalers collected as much as $6.9 billion in "unjust and unreasonable" 
rates. 
Enron says its trading system, particularly the online exchange, has resulted 
in fairer and more efficient markets. The allegations of market abuse are 
"just some sour grapes from people who didn't come up with the idea in the 
first place," said Enron spokesman Eric Thode. 
The online exchanges and other industry Web sites provide the energy traders 
with a window to see the energy availability and bids in markets around the 
country. 
Power industry critics, however, contend the Web's instant access provides 
the traders a way to exploit a delicate supply-demand balance. If the scale 
is tipped even slightly toward an inadequate supply, they say, prices soar 
and energy traders reap huge gains. 
"The whole trading thing is just a front that lets them game the market," 
Aguirre said. "They can get away with it because no one (outside the 
industry) can figure out what they are doing." 
Whatever the energy traders are doing, it's not closely monitored by 
government regulators. 

Blanket CFTC Exemption 

In 1993, the trading of energy products received an exemption from oversight 
by the Commodity Futures Trading Commission, a federal agency that oversees 
commodity and options trading to protect markets from fraud and manipulation. 
Energy is the only commodity that has received a blanket CFTC exemption. 
The exemption was shepherded beginning in 1992 by then-CFTC chairwoman Wendy 
Gramm, wife of Texas Sen. Phil Gramm. She left the CFTC three months before 
the exemption received final approval in 1993. That same year, she joined the 
Enron board of directors, a post that last year earned her $50,000. 
Gramm, an economist at the Mercatus Center at George Mason University, said 
she doesn't recall talking with Enron about the exemption, which she 
characterized as a routine matter triggered by an antitrust case involving 
crude oil. 
"It really didn't have anything to do with Enron or any specific company," 
said Gramm. "It had to do with a general market problem." 
In granting the exemption, the CFTC accepted the industry's contention that 
it shouldn't be subjected to the government's usual commodities regulation 
because its markets are dominated by "large sophisticated commercial 
entities" capable of protecting themselves - in short, that there would be no 
little people to hurt. 
At the time, then-CFTC commissioner Sheila Bair scoffed at the reasoning, 
comparing energy traders to boiler room sales operations that had the 
potential to violate federal anti-fraud laws. 
"Is it really that much of burden on market participants (for the CFTC) to 
retain a sliver of authority regarding fraudulent activity?" Bair wrote in a 
dissenting opinion. 
Wholesale electricity prices negotiated by the traders are eventually 
compiled in quarterly reports and reviewed by the Federal Energy Regulatory 
Commission. And while FERC by law is supposed to prevent unfair prices, a 
majority of its commissioners have advocated a hands-off approach to 
California's energy crisis, insisting that the market can correct itself. 
That posture may finally be changing somewhat. On Wednesday in San Jose, 
Calif., FERC chairman Curt Hebert told lawmakers that his agency hopes to 
begin "monitoring and mitigating" the wholesale electricity market by May 1. 
This could allow FERC to preemptively influence prices. 
Energy economists who have studied the market see signs of ruthless, but 
perfectly legal, behavior. 
Paul Joskow, an MIT economist, concluded in January that electricity 
producers deliberately withheld power to drive up prices. 
"Every business exercises market power when it can, so I don't know why 
people are so surprised that (the generators) used their market power," 
Joskow said. "I didn't see any evidence of collusion in what they did ... It 
was just good business." 
Enron's specific trading methods remain a mystery even to industry analysts, 
partly because the company considers its techniques to be proprietary. But it 
yielded a big payoff last year - an operating profit of $1.6 billion, up 160% 
from $628 million in 1999. 
When electricity and natural gas prices soared to record highs in the fourth 
quarter, Enron's trading profit more than tripled to $538 million. 
Without providing specifics, Enron officials said the profits poured in from 
all over the country. 
"Our success is linked to efficient markets, not higher prices in California, 
or anywhere else for that matter," Steve Kean, an Enron executive vice 
president, said in January testimony before the U.S. Senate. "What we are 
interested in is competitive and well-functioning markets. Our financial 
success is not built on California's back."

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


Independent Power Producers Expect to Meet or Exceed Forecasts
By Kaja Whitehouse

04/16/2001
Dow Jones Business News
(Copyright (c) 2001, Dow Jones & Company, Inc.)

Dow Jones Newswires 
NEW YORK -- Prepare for stellar earnings among independent power producers 
this quarter, because it is no surpise higher energy prices have fattened 
their first-quarter numbers.
A number of electricity generators already have raised their earnings 
forecasts to almost twice last year's numbers, resting fears that problems in 
California would drag down earnings figures. Underlying growth has been 
widening profits on volatile trades of electricity contracts. 
The contracts, which trade like a commodity on the spot market, have been 
fetching high prices as demand for electricity outpaces supply. Trading 
volumes also have contributed to pumped-up prices because such contracts can 
change hands several times before they actually end up with a retail 
customer. 
Strong natural-gas prices also should buoy the group's earnings this quarter. 
In January, power producers were able to fetch $10 per million British 
thermal units, or BTUs, on wholesale natural-gas prices. While that number 
has since fallen to around $5.50, it is still well above January 2000 levels 
of about $3 per BTU. 
Williams Cos. (WMB), Calpine Corp. (CPN), Dynegy Inc. (DYN) and Mirant Corp. 
(MIR) are among those expecting first-quarter numbers to exceed analysts' 
expectations. Enron Corp. (ENE) and Reliant Energy Inc. (REI) have assured 
investors they are on track to meet fiscal 2001 earnings views. 
Before the slew of positive preannouncements, investors worried the group's 
earnings might be dragged down by California's hurting utilities. The 
utilities have been unable to pay for electricity supplied by the generators, 
citing legislation preventing them from passing those costs to consumers. 
Analyst Plays Down Risk From California Problems

Neal Dingman, analyst at , is among those who are dismissing the California 
risks for the first quarter. The generators shouldn't write off money owed by 
California yet because they largely expect to recoup it at "some point down 
the line," he said. The generators have been building cash reserves to 
cushion potential losses while they wait for a solution. 
"In the worst case scenario, (power producers) wouldn't get paid 100 cents on 
the dollar," but it's still too early to tell if that will happen, he said. 
Earlier this month, it seemed investors' worst fears were realized when PG&E 
Corp.'s (PCG) Pacific Gas & Electric Co. filed for Chapter 11 bankruptcy 
protection. But a number of generators smoothed concerns by saying the 
bankruptcy would have no effect on their numbers. 
Earlier Monday, Reliant Energy reported net income of $262.5 million, or 90 
cents a diluted share, up from $133 million, or 47 cents a share, a year 
earlier. Revenue soared to $13.3 billion from $4.21 billion. 
Earnings from continuing operations came to $208.2 million, or 72 cents a 
share, two cents better than analysts' expectations, according to a survey by 
Thomson Financial/First Call. 
At the time Pacific Gas & Electric filed bankruptcy, Reliant assured 
investors the filing wouldn't reduce its first-quarter results. In fact, the 
company, which is owed about $370 million for power sold in California, said 
the filing was merely a means to getting the company's receivables paid. 
Pacific Gas' bankruptcy filing also pushed Calpine to say it wouldn't alter 
its full-year earnings guidance. Two weeks before the Pacific Gas bankruptcy 
filing, Calpine boosted its full-year 2001 guidance to $1.80 a share from 
$1.50. 
As of March 31, Calpine recorded about $267 million in money owed by Pacific 
Gas & Electric, plus a $68 million note receivable. Calpine is still 
considering how it will treat these debts on its first-quarter financial 
results. Unlike the other power producers, Calpine didn't reserve any cash to 
cover unpaid debts. 
Some analysts have said Calpine may have to take charges in coming months if 
the Pacific Gas debts aren't paid. But most agree that the charges wouldn't 
affect the first quarter. Analysts expect Calpine to post earnings of 23 
cents a share, three times last year's seven cents a share but below last 
quarter's 34 cents a share. Refunds Could Hurt Future Quarters

The group seems to have escaped a looming first-quarter concern over demands 
that some of the hefty profits made on trades in times of low supply be 
returned. Earlier last month, the Federal Energy Regulatory Commission 
ordered 13 power producers to either justify the steep prices they charged in 
California or refund million of dollars to the utilities. 
Hardest hit were Dynegy and Williams, which are fighting orders to refund 
$45.8 million and $29.6 million, respectively. But even in the midst of 
troubles with FERC, the companies raised their first-quarter forecasts above 
Wall Street estimates. 
Citing improved performance in energy trading and gas exploration, Williams 
said it expects first-quarter earnings of between 65 cents and 75 cents a 
share. 
Dynegy raised its outlook for the quarter to 40 cents a share, citing success 
in its core convergence business. 
Barry Abramson, analyst at UBS Warburg, is among those who think refunds on 
the overcharges aren't severe enough to dramatically hurt future earnings. 
"This is still a small portion of the money made out of California," he said. 
"It's a small risk." 
Only Dominion Resources Inc. (D) of Richmond, Va., is considered safe from 
California's price wars because it focuses on the Eastern states. Analysts 
expect the company to earn $1.14 a share for the quarter, only 10 cents a 
share above last year. 
Analysts predict Mirant Corp. (MIR) will post 47 cents a share for the 
quarter. The company anticipates earnings in the range of 46 cents a share to 
48 cents, compared with earnings of 28 cents a share a year earlier. 
Enron, however, hasn't provided guidance for the first quarter, but sees an 
"outstanding quarter" because gas and power trading volumes are up. The 
company, which earned 40 cents a share in the year-earlier quarter, sees 
full-year 2001 earnings of 45 cents a share. 
While the generators will likely brush aside the risks of California in the 
first-quarter, some suspect troubles could catch up to them in months to 
come. 
The imbalance between supply and demand in an unregulated market has boosted 
the generators' profits, but whether they will continue to roam free remains 
to be seen. There is still the risk that FERC may cap wholesale prices to 
appease California legislators, and there also is the potential for 
California to seize low-cost electricity contracts to control what they see 
as an outrageous market. 
"It is a positive story, but there is still that black cloud out there until 
these issues can be cleared," Dain Rauscher's Mr. Dingman said. 
-- Write to Kaja Whitehouse at kaja.whitehouse@dowjones.com 
Copyright (c) 2001 Dow Jones & Company, Inc. 
All Rights Reserved

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


Seattle City Utility Racks Up $92 Million in Power Purchases in March
Jim Brunner

04/16/2001
KRTBN Knight-Ridder Tribune Business News: The Seattle Times - Washington
Copyright (C) 2001 KRTBN Knight Ridder Tribune Business News; Source: World 
Reporter (TM)

Seattle City Light spent a record $92 million buying power on the market in 
March, more than any month in its 91-year history. 
City Light officials say the cost of buying power for local residents and 
businesses eclipsed the previous records -- $84 million set in February and 
nearly $80 million in January.
To put that in perspective: In 1999, before the current power crisis, the 
utility's total power bill for the entire year was $90 million. "We're 
spending that every month now. The dollars that are involved are staggering," 
said Paula Green, deputy superintendent of City Light. 
It's a cash hemorrhage brought on by Washington's drought, which means less 
water in the reservoirs at city-owned dams. That increases Seattle's need to 
purchase electricity on a market where prices have zoomed to unprecedented 
levels. 
Adding to the frustration for Seattle city officials is the fact that most of 
that money is flowing to out-of-state utilities and power brokers who are 
profiting enormously from the energy crunch. 
Last month alone, the bill from Enron, a Houston-based corporation, was $25.5 
million, putting it well ahead of the No. 2 seller, California's Sempra 
Energy, which sold $7.4 million worth of electricity to City Light. 
City Light still gets most of the 1,200 megawatts necessary to serve its load 
from city-owned dams and from its contract with the Bonneville Power 
Administration (BPA). The utility buys only about 15 percent of its power on 
the market. But that thin slice now accounts for more than 90 percent of its 
power costs. 
Part of the explanation for March's record power-buying binge was City 
Light's recent decision to store up extra water behind Ross Dam on the Skagit 
River instead of spilling it through the dam's power turbines. 
In a normal water year, City Light officials would be spilling water for 
energy and expecting it would be replaced with spring runoff. Now, they're 
saving the water so it can be spilled later to help salmon runs and to 
generate power for Seattle this summer, when energy prices are expected to 
surge even higher, to more than $400 per megawatt hour. 
"We're insulating ourselves. By putting out one eye now, we're avoiding 
cutting off our head later," said Bob Royer, City Light spokesman. 
Seattle ratepayers are feeling the pain, with a 28 percent City Light rate 
increase so far this year. More rate increases are likely on the way. 
Higher rates have also led to plant closures and layoffs in Bellingham and 
Spokane. 
Meanwhile, Enron's revenues more than doubled last year, to $101 billion. Its 
stock prices surged to end the year at $88 a share, up from $44 the year 
before. The stock was trading at $57 a share last week. 
"It doesn't just feel unfair, but immoral that these major companies like 
Enron are making billions of dollars at the expense of everyday people and 
businesses," said City Councilwoman Heidi Wills, who chairs the Council's 
Energy and Environmental Policy Committee. 
"There's this enormous transfer of wealth from our ratepayers to the 
shareholders of these companies," Wills said. 
Northwest leaders have called for the Federal Energy Regulatory Commission to 
impose price caps. But opponents say price caps would do nothing to encourage 
the construction of new power plants, or energy conservation. 
Karen Denne, an Enron spokeswoman, said it's unfair to fault the company for 
selling power at prices dictated by the free market. "Enron is providing 
electricity to a market that needs it," Denne said. "It's unfortunate when 
regulators are pointing fingers, looking to fix blame, when this is a problem 
of supply and demand." 
The company hails from President George W. Bush's home state of Texas, and is 
one of the top "soft money" donors to political campaigns. Enron and its 
executives gave $435,000 to the Democrats and $1.2 million to Republicans 
last year, according to Common Cause. 
Its chairman, Kenneth Lay, has consistently been one of the top donors to 
Bush's presidential and gubernatorial campaigns. 
Enron doesn't own a lot of dams or power plants. Instead, the company makes 
money as a middleman -- buying power from utilities and then reselling it for 
a profit. The company, formed in 1985 from the merger of two pipeline 
companies, has become the largest trader of wholesale electricity in North 
America. 
Part of its success in the energy market stems from its groundbreaking use of 
the Internet to make buying electricity as easy as ordering a book online. 
You just point, click and spend. 
"It's easier than Amazon," said Steve Lewis, a power marketer with City 
Light, demonstrating the company's Web site. It lists available power 
"products" and the asking price for both buyers and sellers. 
Lewis and other power marketers monitor City Light's projected power needs 
and then use the phone or Internet to schedule electricity for the next hour, 
next day or months ahead. They try to find the best price available, but it's 
clearly a sellers' market. 
Utilities routinely buy power that used to cost $30 per megawatt hour for 
more than $200. At times last month, City Light was buying power for $450 a 
megawatt hour. And it's not because the cost of generation has gone up. 
"This is pure profit," said Green, deputy superintendent of City Light. 
There is evidence that the Northwest is in some ways being hit even harder 
than California, whose experiment with deregulation is blamed for roiling the 
power markets. A recent analysis found that Pacific Northwest utilities are 
paying the highest prices in the nation for the next-day delivery of 
wholesale power. 
However, regional utilities also sell power for extraordinarily high prices. 
In fact, some of the highest average prices paid by City Light last month 
were to neighbors. 
Puget Sound Energy, Western Washington's largest electric utility, charged 
City Light the highest average price of any seller last month, at $303 per 
megawatt hour, according to City Light's preliminary billing estimates. 
Spokane's Avista Energy charged $281. 
That compares with Enron's average price of $173 per megawatt hour and an 
overall average of $194. 
The BPA, by comparison, charges City Light $22 per megawatt hour. 
City Light typically relies on local utilities more when it needs power 
delivered immediately. And prices for short-term deals can be higher 
depending on the time of day. The city has only a long-term contract with the 
BPA. 
Despite the record-setting month, city officials hope they'll be in better 
shape before the year is out. Mayor Paul Schell has taken to calling Oct. 1 
Seattle's "energy independence day" because that's when the city will begin 
receiving more hydroelectric power under a new contract with the BPA. 
The historically cheap BPA power, combined with a contract with a gas-fired 
power plant in Klamath Falls, Ore., should reduce the city's reliance on the 
open market, city officials say. 
But the BPA, too, has been stricken by higher market power costs and may have 
to increase its rates to City Light by 250 percent. The City Council has 
already agreed to pass those higher costs on to Seattle ratepayers although 
it's unclear how much that would raise the bill of the average person. 
Even at a higher rate, City Light officials regard the BPA power as a good 
long-term strategy for getting power costs under control. If they succeed, 
the rate increases approved this year could eventually be rescinded. 
Until then, local ratepayers will have to keep writing bigger checks to City 
Light with the knowledge that some of their money will find its way to Texas.

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


Sierra Pacific Shares Fall After Dividend Canceled (Update2)
2001-04-16 16:17 (New York)

Sierra Pacific Shares Fall After Dividend Canceled (Update2)

    (Updates with closing share price. For more on the California
electricity crisis, see {EXTRA <GO>}.)

     Reno, Nevada, April 16 (Bloomberg) -- Sierra Pacific
Resources shares fell 8.3 percent after the owner of Nevada's two
largest utilities canceled its May quarterly dividend because it
may need the money to buy electricity.
     Shares of Reno, Nevada-based Sierra Pacific fell $1.21 to
$13.29. They've dropped 17 percent this year.
     Sierra Pacific, which sold power plants last year to win
regulatory approval of the merger that created the company, has
lost ``hundreds of millions of dollars'' buying power at prices it
can't pass on to customers, Chief Financial Officer Mark Ruelle
said Friday. He declined to be more specific.
     Nevada regulators allowed the company's utilities to raise
rates by 17 percent in February, though the increase won't end
losses, Ruelle said.
     The company, which has more than 300,000 customers in Nevada
and California, has paid a quarterly dividend of 25 cents since it
was created in the July 1999 merger of Sierra Pacific Resources
Inc. and Nevada Power Co. It lost $18.2 million, or 23 cents a
share, in the fourth quarter because of the surge in power prices.
     The average price of electricity in the west rose more than
ninefold last quarter from a year ago.

                        Nevada Legislation

     The Nevada legislature is considering letting the company
recover debt by keeping rates high after power costs drop, Sierra
Pacific spokeswoman Faye Andersen said. The measure also would
block Sierra Resources from selling a 14 percent stake in the
Mohave coal-fired power plant in Laughlin, Nevada, Andersen said.
     Sierra Pacific had agreed to sell its Mohave stake to
Arlington, Virginia-based AES Corp. to win regulatory approval for
its $3.1 billion purchase of Portland General Electric from
Houston-based Enron Corp.
     The sale of Portland General, which has 700,000 customers in
Portland, Oregon, was stalled in January after California
regulators barred utilities from selling generators until 2006
because of the state's energy crisis. Southern California Edison
had agreed to sell its 56 percent stake in the Mohave plant to AES
as part of a joint transaction with Sierra Pacific.
     Southern California Edison, California's second-biggest
utility, is owned by Rosemead-based Edison International. Edison
agreed last week to sell its power-transmission lines to the state
for $2.76 billion to avoid bankruptcy. Edison has $5.4 billion in
losses from buying power at prices far exceeding what it could
charge customers.