Enron Unit Must Honor Pact With California Schools (Update1)
Bloomberg, 04/11/01

Judge orders Enron to deliver electricity to universities
Associated Press Newswires, 04/11/01

WSJ.COM: Rumors? Firms Ponder How To Announce Layoffs
Dow Jones News Service, 04/11/01

U.K. Wind Power Gears Up For The Great Leap Offshore
Dow Jones Energy Service, 04/11/01

INDIA: Enron names Australian conciliator for India project.
Reuters English News Service, 04/11/01

Chile's Enersis Weighs Building Electric Plants In Brazil
Dow Jones International News, 04/11/01

U.A.E.'s Dolphin May Supply Natural Gas to India, Agency Says
Bloomberg, 04/11/01

PG&E's Peter Darbee (Transcript of Interview)
Bloomberg, 04/11/01



Enron Unit Must Honor Pact With California Schools (Update1)
2001-04-11 16:30 (New York)

Enron Unit Must Honor Pact With California Schools (Update1)

     (Adds comment from judge, details of hearing starting in
third paragraph.)

     San Francisco, April 11 (Bloomberg) -- An Enron Corp. unit
must provide electricity to California universities under an
existing contract, U.S. District Judge Phyllis J. Hamilton
ordered.
     Enron Energy Services Inc. had agreed to provide energy and
related services to the University of California and California
State University, said Douglas R. Young, a lawyer for the
universities. The company cut off the schools on Feb. 1, and
transferred the accounts to PG&E Corp. and Edison International
utilities, Young said at a hearing today in San Francisco.
     The schools say they want to keep the contract with Enron,
because it is more reliable than the utilities. Both utilities are
burdened with billions in power-buying debt, and Pacific Gas &
Electric Co. has filed for bankruptcy. The utilities' customers
have been subjected to rolling blackouts amid power shortages in
the state.
     ``Enron did not have the right to return the university
systems to the utilities,'' Hamilton said. She granted the
universities' preliminary injunction, forcing Enron to honor the
contract for now.
     Enron and the universities announced the four-year contract
in 1998, valuing the agreement at $300 million to $500 million in
electricity sales. Cal State would save $1.5 million a year
through the contract, they said, and U.C. would save $2.4 million.

                         The Switch

     Enron lawyer A. William Urquhart said the company didn't
cancel the contract; it just switched the source of supply to the
utilities. Enron said it will file an immediate appeal with the
9th U.S. Circuit Court of Appeal in San Francisco.
     During the hearing, Urquhart said Enron had a
``responsibility to its shareholders'' to make financially prudent
decisions. At most, the universities have suffered some economic
damage, which would not entitle them to enforce the contract,
Urquhart said.
      California Attorney General Bill Lockyer, who filed a
``friend of the court'' brief in the case, said that Enron's duty
to its shareholders ``seems to be to rip off California
consumers.''
     Enron is saying ``we don't want to sell power at the prices
we promised,'' Lockyer said.
     ``We continue to believe that we're acting in the best
interests of our clients,' Enron Energy Services spokeswoman Peggy
Mahoney said after the hearing.

                         Lawsuit

     The universities sued Enron in March, seeking to enforce the
four-year contract. The schools also said in court documents that
buying from utilities would render obsolete new electricity meters
that help them conserve.
     The universities have installed meters to collect data on
consumption, helping them reduce power bills. Those $1,500 meters
can't be used on the ``bundled'' systems like the utilities' and
would have to be removed, said Charles McFadden, spokesman for the
University of California.
     Enron says that it has offered to continue to provide all
campuses with the metering, billing and related services under the
agreement.
     Judge Hamilton ordered the universities to post a $1 million
bond. The routine order assures Enron's losses will be paid, if
the energy company prevails in the case.


Judge orders Enron to deliver electricity to universities
By DAVID KRAVETS
Associated Press Writer

04/11/2001
Associated Press Newswires
Copyright 2001. The Associated Press. All Rights Reserved.

SAN FRANCISCO (AP) - Saying that Enron Energy Systems Inc. may be in breach 
of contract, a federal judge Wednesday ordered the Houston company to abide 
by its agreement to sell cheap power to the state's public universities. 
Enron was attempting to get out of delivering power for the final year of a 
four-year deal with the California State University and University of 
California systems. Enron, which buys power from producers and sells it on 
the market, said the contract would cost the energy concern $12 million a 
month because of skyrocketing wholesale power prices.
Enron said the state should free Enron from its obligation and taxpayers 
should pick up the tab. 
"It's our economic interest to provide a service with the least amount of 
dollars we can provide it for," Enron attorney A. William Urquhart said. He 
later described the case as being "all about money. It's all about money." 
Enron said it would file an emergency appeal to the 9th U.S. Circuit Court of 
Appeals in San Francisco to overturn U.S. District Judge Phyllis Hamilton's 
ruling in the suit brought by the state's two university systems. 
Appearing in federal court, state Attorney General Bill Lockyer argued that 
Enron wants out of the contract so it can engage in a "marketing game" with 
the universities' promised power and sell it on the open market for 10 times 
more than what the electricity cost Enron. 
He said lawmakers may have "left the keys in the car" when they approved 
California's failed energy deregulation scheme that has prompted the energy 
crisis, "But it is still theft to steal the car." 
The judge issued a temporary injunction against Enron, forcing it to continue 
providing service as the suit brought by the universities proceeds. When the 
judge issued the order, she also said there is a likelihood Enron will lose 
the suit. 
"I am persuaded, in the end, there is a very strong likelihood of success on 
the breach of contract claim," the judge said. 
UC's annual electric bill is about $87 million and its natural gas bill is 
about $26 million. CSU annually pays about $40 million for electricity and 
$20 million for natural gas. 
The case is UC Regents vs. Enron Energy Systems Inc., 01-1006.

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


WSJ.COM: Rumors? Firms Ponder How To Announce Layoffs
By Stephanie Miles

04/11/2001
Dow Jones News Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

WSJ.com 

NEW YORK -(Dow Jones)- When British technology publisher Future Network PLC 
announced a broad restructuring that would result in 350 layoffs, few 
employees were surprised. For a week, workers had been glued to an 
industry-gossip site.
"Everybody was waiting, expecting to be fired," says Scott Laine, who was 
laid off from a job in sales for Revolution magazine, published by Future's 
U.S. subsidiary Imagine Media. 
Managers were watching the message boards, too. So, when Future announced the 
restructuring in February, it sent a short companywide e-mail with the press 
release attached. The company also sent out two more detailed letters, from 
Future's chairman and chief executive respectively, explaining in more detail 
the circumstances surrounding the layoffs. But instead of beaming them 
electronically, the U.S. unit printed out color paper copies and placed them 
on employees' desks, in an effort to keep the note from being quickly posted 
online or cleanly photocopied. 
"Why make it easy?" says Nancy O'Neill, then president of Imagine Media. 
O'Neill stepped down as president at the end of March. 
Leaks are nothing new. But the "post once, read anywhere" nature of Internet 
rumors has forced companies to make much quicker decisions about when to 
release information about layoffs to employees and the public, and what 
exactly to say. Companies, for a variety of reasons, are often stuck saying 
"no comment," only to confirm the layoff rumors later on. Worse, a scramble 
to respond to investor and press inquiries can sometimes result in 
embarrassing reversals. Wake-Up Calls 

The Web-consulting industry is among the most closely scrutinized sectors on 
Web rumor boards, and companies are under constant pressure to respond. It's 
no accident: Consulting firms have been going through wrenching downsizings 
due to a slowdown in demand for Internet projects. 
After rumors popped up online last month, consulting firm Razorfish Inc. 
(RAZF) confirmed to several press organizations that it was offering a 
"voluntary termination plan" to an undisclosed number of employees. But a 
little more than a week after the reports of the voluntary plan, postings on 
Vault.com message boards were abuzz with reports of early morning wake-up 
calls. "Woke me from a sound sleep," wrote one anonymous poster at noon 
Saturday. "Anybody else get jousted (sic) out of bed?" Other cryptic notes 
followed, and a note on Sunday spelled it out: "They didn't get as many 
people to volunteer as they wanted to, so from now on it's involuntary." 
Melissa Kramer, a Razorfish spokeswoman, confirmed that the company called an 
undisclosed number of employees at home Saturday to tell them they no longer 
had jobs, and sent them packages confirming their involuntary termination. 
She says the voluntary plan hadn't drawn as many people as hoped. 
Kramer says the activity on the message boards had no effect on how layoffs 
were carried out, either in terms of how affected employees were notified or 
the timing of the announcement. 
In general, companies have a lot of latitude in deciding what information to 
release. Aside from releasing quarterly earnings reports, public companies 
are required to disclose news that is material to their operations. But when 
it comes to layoffs, the requirements laid out by the Securities and Exchange 
Commission are fuzzy. 
"It's a fact-specific situation," says John Heine, an SEC spokesman, 
explaining that the SEC expects companies to report any material changes in 
the company's outlook in its quarterly and annual reports. Severance pay and 
other layoff-related expenses will show up in quarterly reports as 
restructuring charges, but "there isn't a specific [SEC] rule that I can 
point you to that deals with layoffs," Heine says. Business Decision 

Unless the job cuts are so large that local or federal authorities are 
required to be notified under plant-closure or other laws, publicly held 
companies are generally under no obligation to confirm the number of layoffs, 
specific firings, or other work-force changes, experts say. 
Disclosing job cuts is often "less of a legal determination than it is a 
business decision," says Richard Rowe, a corporate attorney and partner with 
Proskauer & Rose LLC in Washington D.C. 
Another issue is timing. Some companies issue a press release announcing cuts 
right away, others wait to release the news with their quarterly earnings 
reports, while others refuse to even comment. (Dow Jones & Co., publisher of 
The Wall Street Journal, recently said that it is laying off an undisclosed 
number of employees at WSJ.com. The company said it will provide more details 
in its quarterly report slated for this week.) 
The decision depends often on how the company thinks layoffs will play with 
investors and surviving employees. For Old Economy industrial firms, cuts are 
often seen as effective way to slash overhead costs. But in the beleaguered 
Internet sector, layoffs often are viewed as a harbinger of future troubles. 
For example, defunct e-tailers eToys Inc. and Garden.com Inc., which traded 
on the Nasdaq Stock Market, both disclosed broad layoffs about three months 
before the companies shut down altogether. 
If the jobs cuts "are enhancing shareholder value, that's really good news 
for a publicly traded company," says John Kroen, executive vice president at 
investor-relations firm Dresner Corporate Services. "As long as it doesn't 
signal the end." 
Adding to the pressure on companies facing layoffs are new rules about 
disclosure. While the Internet has loosened companies' control of 
information, the new Regulation FD, which prohibits selective disclosure of 
information, largely limits companies' dissemination options. News can't be 
filtered through analysts or large investors as in the past, so for the most 
part, companies have to either make a public statement or stay mum. 
Take Amazon.com Inc. (AMZN). In January, rumor site DotComScoop.com predicted 
that the e-tailer was about to announce widespread layoffs, but Amazon 
declined to comment publicly, citing a policy of not commenting on 
speculation or rumors. Days later, in its fourth-quarter earnings report, the 
company announced that it was firing 1,300 workers and closing a distribution 
facility. 
Amazon didn't return calls seeking comment. 
When EMC Corp. (EMC) fired several hundred workers in February as part of an 
annual review, word leaked out on investor message boards run by Yahoo! Inc. 
(YHOO). Although the storage maker maintains that the job cuts were a routine 
course of business, the company's shares fell as rumors hit the Internet. In 
years past, EMC didn't publicly disclose what it termed performance-based 
firings, according to Mark Fredrickson, vice president of corporate 
communications. This time, however, the company decided to confirm the 
firings in the press in order to make clear that the job cuts weren't related 
to the state of the economy or the technology sector. 
"I think it attracted attention because of the environment," he says, adding 
that the company didn't consider the cuts, of roughly 3% of EMC's 24,000 
employees, of material importance to investors. "Two years ago, in the midst 
of the high growth which we were enjoying, this would not be news." 
But sometimes, being proactive in the face of rumors can help change the tone 
of coverage. "It's better to put your words out there yourself then have them 
cut and pasted back at you," says Elliot Sloane, president of Sloane PR 
(www.sloanepr.com), a public- and investor-relations firm. 
Last month, for instance, energy company Enron Corp. (ENE) publicly denied 
rumors that it was planning layoffs in its broadband Internet unit, rumors 
that had helped to send its stock to a 52-week low. The company had recently 
terminated a video-on-demand partnership with Blockbuster Inc. (BBI). 
But in a conference call that reiterated the company's 2001 earnings outlook, 
the company explained that third-party contracts for broadband capacity had 
eliminated some of the need to build its own network. An undisclosed number 
of employees had been redeployed as a result, the company said, but the 
rumors of layoffs were false. The stock rallied, reaching $59.40 at 4 p.m. 
that Friday, up from a low of $51.51 Thursday morning. Circling the Wagons 

Still, many executives resist issuing any comment on layoffs or work-force 
shifts. "The majority of the CEOs I've dealt with want to keep it as much 
in-house as possible," says Dresner 's Kroen. "It's rare that you find a CEO 
who wants to tell as much as possible. They have to be pushed to air their 
dirty laundry." 
While top executives huddle to put the final touches on layoff plans and 
discuss how much information to release publicly, employees can face days or 
weeks of waiting for the ax to fall. Message boards can get very crowded. 
At Imagine, O'Neill says, "I wish we could have done something different [to 
avoid] a period of anxiety where people were searching for anything that's a 
scrap of news." But British financial disclosure rules governing parent 
Future Networks dictated the timing of the announcement, she says. As a 
result, the official news came out nearly a week after rumors first surfaced 
on the Web. 
In the meantime, so many co-workers were piling onto F____edCompany.com that 
one participant piped in: "Hi, since everyone here seems to be from Imagine, 
I lost my bathroom key and entry card yesterday. If anyone finds it, could 
they please post here?" 
Write to Stephanie Miles at stephanie.miles@wsj.com

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


U.K. Wind Power Gears Up For The Great Leap Offshore
By Geoffrey T. Smith
Of DOW JONES NEWSWIRES

04/11/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

LONDON -(Dow Jones)- Ten years ago, Peter Edwards, a dairy farmer in 
Delabole, Cornwall, sold his herd to raise the money for what was then the 
U.K.'s first wind farm. It was uncompetitive and did nothing to lessen the 
country's dependence on fossil fuels. All in all, it was not the most 
convincing vision of the future. 
Today, you would think most U.K. farmers would willingly change places with 
him. As livestock farming staggers from one crisis to the next, wind farming 
goes from strength to strength, passing a notable landmark last week when the 
U.K.'s Crown Estates issued seabed leases for 13 offshore wind farm projects 
to established generating companies more traditionally associated with 
fossil-fuel burning. These projects could attract up to GBP1.6 billion in 
investment and lead to the installation of 1,500 megawatts of generation 
capacity around Britain's coast by 2004. That would meet the electricity 
needs of 1.1 million households, according to estimates by the British Wind 
Energy Association.
The projects - seven in the Irish Sea and six in the North Sea - represent 
the first concerted effort in the U.K. to raise the contribution of renewable 
energy sources, other than hydropower, in the overall energy mix. 
Until now, the prime contribution of wind to the U.K.'s energy sector has 
been to blow the emissions of coal and gas-fired plants across the North Sea 
to Norway, affecting the environmental consciousness of both countries 
accordingly. 
For the wind industry, going offshore is somewhat like inventing Henry Ford's 
assembly line. If the engineering is robust enough, it will revolutionize the 
economics of the sector. Huge economies of scale beckon: larger numbers of 
more powerful turbines, driven by higher wind speeds. It also goes a small 
part of the way to addressing wind power's major drawback, its 
unpredictability. Offshore wind are more constant than onshore. 
The days when such projects were the preserve of companies on the fringe of 
the energy sector, let alone dairy farmers, are long gone. Among those to be 
awarded leases were arms of numerous established U.K. generators such as 
Innogy PLC (IOG), Powergen PLC (PWG), Scottish Power PLC (SPI) Enron Corp 
(ENE) and TXU Europe (TXU). 
All of these will be forced, by the government's Renewables Obligation, to 
source an amount probably not less than 5% of their supplies to renewable 
sources of energy by 2003, rising to 10% by 2010. A system of tradable 'green 
certificates' will be set up to enable them to trade any surplus of renewable 
power they have on the open market with suppliers who can't meet the 
Obligation by themselves. 
Wind farms have flourished even more in countries where the political 
consensus has allowed a more aggressive subsidizing of the technology, such 
as Germany and Denmark, which had installed capacity bases of almost 5,500 MW 
and 2,280 MW respectively at the end of last year, according to estimates by 
analysts at Dresdner Kleinwort Wasserstein. 
Crown Estates and the BWEA are currently in negotiations over a second round 
of licenses for larger sites but a spokeswoman for Crown Estates said there 
is no timetable for awarding these leases yet. 
In contrast to Germany and Denmark, the emphasis of U.K. policy-makers for 
the last 10 years has been squarely on bringing prices down, rather than 
making energy greener. This has tended to work against renewable sources such 
as wind, whose generation costs have been traditionally higher than those for 
conventional sources such as coal, natural gas and nuclear power. 
However, as Alison Hill, communications manager at the British Wind Energy 
Association, points out, the generation costs of existing onshore facilities 
have fallen from around 11 pence a kilowatt-hour for first-generation 
technology to between 1.9-3.5 pence a kilowatt-hour today. By comparison, 
base loads for the coming winter currently trade at around 2.1-2.2p/KWh in 
what is arguably the world's most competitive and deregulated electricity 
market. 
She notes that a pilot project off Blyth in north-east England is currently 
generating at between 5p-6p/KWh. If offshore technology can improve at 
anything like the same rate as onshore technology has done, the need for any 
form of subsidy may not be long-lived. 
"If we can just get capital grants to offset the initially higher cost, they 
should be enough to bring these projects into a competitive position on the 
open market," Hill says. 
The existing stock of subsidy for wind in the U.K. is a mere GBP49 million, 
is not much compared to the GBP1.6 billion investment to be expected from the 
first round of offshore farms, and less than half of what the U.K. government 
doled out to its domestic coal industry last year. 
But even if generating costs fall to a level where wind power can compete 
with fossil fuels, there are other ways in which it may increase the cost of 
electricity to consumers. Investment in electricity grids will probably have 
to rise to ensure that they are robust enough to deal with large and sudden 
surges in power supply, and such investments are generally financed by fees 
levied on all grid users. 
Equally, a bigger share of intermittent power may lead to greater volatility 
in the 'balancing market', the market segment in which the grid operator 
matches demand and supply on a second-by-second basis. The U.K.'s Office of 
Gas and Electricity Markets reckons that under the New Electricity Trading 
Arrangements, balancing shouldn't account for more than 10% of the overall 
market, but it is also the highest-priced market segment, and prices have 
been uncomfortably volatile since NETA was introduced two weeks ago. Neither 
regulator, grid operator nor traders right now would relish the thought of 
exposing it to a factor which would heighten that. 
Even so, they may still prefer it to being a dairy farmer in Cornwall. 
-By Geoffrey T. Smith, Dow Jones Newswires; (+44 20) 7842 9260;
geoffrey.smith@dowjones.com

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


INDIA: Enron names Australian conciliator for India project.
By Maria Abraham

04/11/2001
Reuters English News Service
(C) Reuters Limited 2001.

BOMBAY, April 11 (Reuters) - U.S. energy giant Enron has named a former 
Australian state chief justice to act as conciliator in a dispute over unpaid 
bills involving its controversy-ridden power project in western India. 
India said on Tuesday it would enter conciliation with Enron after the 
multinational's Indian unit, the Dabhol Power Co (DPC), sent a "political 
force majeure" notice to the Maharashtra State Electricity Board (MSEB).
Such a notice is a contractual clause unhappy parties give as a first step 
toward possibly dissolving a contract. 
In March, Enron invoked a counter-guarantee of the Indian government after 
the state utility failed to clear its bill of 1.02 billion rupees ($21.91 
million) for December. 
Last week, Enron, which owns 65 percent of Dabhol, notified the government it 
was applying to an arbitration court in London to consider its claim for the 
1.02 billion rupees. 
The DPC spokesman said that "Sir Laurence Street, the former Chief Justice of 
New South Wales, has been appointed as conciliator for DPC". 
He said the government had said it would name a conciliator within a week to 
sort out the dispute involving the $3-billion project at Dabhol, the biggest 
foreign investment in India. 
Both the conciliators would then appoint a third person and the three-party 
panel would begin the conciliation process. Should the panel fail to resolve 
the issue, the two parties would then enter into arbitration, the spokesman 
said. 
The conciliation is the latest step to resolve the long-running confrontation 
between the Houston-based company and the Maharashtra government over unpaid 
bills. It comes at a time when India is struggling to attract foreign 
investment to meet a growing hunger for power. 
Dahbol has come under fire because of the relatively high cost of its power. 
Critics object to it charging 7.1 rupees per kilowatt hour versus 1.5 rupees 
charged by other suppliers. 
Politicians have called for a renegotiation of Dabhol's contract and a 
re-examination of whether the facility's second phase, which now is being 
built, should be completed. 
Also on Wednesday, the state government said the report of a committee set up 
to examine all aspects of the Enron project would be put before the 
legislative assembly on Thursday. 
The committee, chaired by former bureaucrat Madhavrao Godbole, is expected to 
submit its final report next month, state energy minister Padamsinh Patil 
told Reuters. ($1=46.56 Indian Rupee).

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


Chile's Enersis Weighs Building Electric Plants In Brazil

04/11/2001
Dow Jones International News
(Copyright (c) 2001, Dow Jones & Company, Inc.)

SANTIAGO -(Dow Jones)- Chile's Enersis SA (ENI) is studying the possibility 
of building two electricity generation plants in Brazil, one in the state of 
Ceara and another in the Rio de Janeiro area, local paper El Diario said 
Wednesday. 
Enersis CEO Enrique Garcia told El Diario each facility would be designed to 
initially produce between 300 and 350 megawatts of electricity, beginning in 
2004. Garcia estimated that $700 million in investment would be required to 
build both facilities.
Garcia added that Enersis is still interested in acquiring existing 
generation facilities in Brazil, which is expected to experience a possibly 
severe electricity supply shortage in coming months. 
Garcia confirmed that Enersis is particularly interested in participating in 
government privatization auctions of generators Companhia Energetica de Sao 
Paulo (E.EPL), or Cesp, and Companhia Paranaense de Energia (E.CPE), or 
Copel. 
Enersis executive Rafael Miranda recently said Enersis will also evaluate the 
possible purchase of Brazil's Electrogen, which is now controlled by U.S. 
company Enron. 
Enersis is owned 64% by Spain's Endesa SA (ELE). 
Company Web site is http://www.enersis.cl 
-Andrea Welsh, Dow Jones Newswires; 562-460-8547; chile@dowjones.com

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


U.A.E.'s Dolphin May Supply Natural Gas to India, Agency Says
2001-04-11 11:00 (New York)


     Doha, Qatar, April 11 (Bloomberg) -- Dolphin Energy Ltd., a
venture of the Abu Dhabi government, Total Fina Elf SA and Enron
Corp., said it has held talks on supplying natural gas to India
through undersea pipeline, India Abroad News Service reported.
     ``We are currently in India to listen and find out the
security issues and the country's needs to secure cheap and clean
energy fuel,'' said Ghanim Alazdi, a Dolphin project manager, IANS
reported.
     Dolphin has signed an accord with Qatar to develop its North
Dome field, the world's largest natural-gas deposit, and build a
pipeline under the Persian Gulf to the United Arab Emirates, Oman
and eventually Pakistan. A separate pipeline from Oman could cross
the Arabian Sea to India, Alazdi said.
     India needs to import natural gas to service its population
of more than 1 billion. Plans for an overland pipeline from Iran
have been blocked by Pakistan, which lies along the route and has
fought three wars with India.
     Dolphin is working with the state-owned Gas Authority of
India Ltd., Alazdi said. Dolphin has already agreed to sell 1
billion to 1.5 billion cubic feet of gas per day to Pakistan.
     Oman's government has said a pipeline from its territory to
India would cost about $10 billion, too expensive to recoup costs.
     The U.A.E. Offsets Group, an arm of the Abu Dhabi government,
controls 51 percent of Dolphin. Total and Enron split the rest.
     India has signed a contract to buy 5.5 million tons of gas a
year starting in 2003 from Qatar's Ras Laffan Liquified Natural
Gas Co., which is 70 percent owned by Qatar, with Exxon Mobil
Corp. holding the remainder. The gas will arrive at the port of
Dahej in Gujarat State.
     Liquefied natural gas, or LNG, is cooled to a liquid form to
allow for transport in ships.




PG&E's Peter Darbee (Transcript of Interview)
2001-04-11 17:17 (New York)

****THE FOLLOWING IS AN UNOFFICIAL TRANSCRIPT.****
BLOOMBERG L.P. DOES NOT GUARANTEE THE ACCURACY OF THIS TRANSCRIPT.

     San Francisco, April 11 (Bloomberg) -- The following is a
transcript of a Bloomberg interview with Peter Darbee, chief
financial officer at PG&E Corp. The reporter is Su Keenan.

     KEENAN: JOINING US NOW FROM SAN FRANCISCO IS PETER DARBEE. HE
IS THE CHIEF FINANCIAL OFFICER FOR PG&E CORPORATION, WHICH IS THE
PARENT COMPANY OF PACIFIC GAS & ELECTRIC. AND WHAT HIS COMPANY'S
REASONING BEHIND THE MOVE TO FILE FOR BANKRUPTCY IS ONE OF THE
THINGS WE'RE GOING TO ASK HIM, AS WELL AS WHAT'S NEXT. LET'S TALK
ABOUT THE REASONING FOR FILING, NOW EDISON COULD HAVE GONE THIS
ROUTE BUT DECIDED NOT TO. WHY WAS IT THE RIGHT MOVE FOR YOUR
COMPANY?

     DARBEE: WELL, SU, THERE WERE A NUMBER OF FACTORS THAT WE
CONSIDERED. THE FIRST IS THAT THE CALIFORNIA PUBLIC UTILITIES
COMMISSION WAS COMING OUT WITH ORDER AFTER ORDER WHICH DE-
POSITIONED US AND PUT US IN A WORSE POSITION VIS-A-VIS BOTH OUR
CREDITORS AND OUR SHAREHOLDERS, SO THAT WAS THE FIRST FACTOR. THE
SECOND FACTOR WAS THAT THE STATE WAS NOT CLEAR WITH US REGARDING
THE ONGOING LIABILITY THAT MIGHT BE PASSED THROUGH TO US FROM THE
INDEPENDENT SERVICE OPERATOR, AND THEREFORE, WE WERE FACED WITH A
LIABILITY THAT LOOKED LIKE IT WAS INCREASING BY $300 MILLION PER
MONTH. AND LASTLY, AS WE REVIEWED WHERE NEGOTIATIONS WITH THE
STATE WERE GOING, WE COULD NOT SEE SUBSTANTIAL PROGRESS, AND
LIKELIHOOD IN THE NEAR TERM THAT WE WOULD BE ABLE TO ACCOMPLISH A
SUCCESSFUL DEAL WITH THE STATE OF CALIFORNIA. SO ALL OF THOSE
FACTORS CONSIDERED, WE MADE THE DECISION THAT WE WERE BEST SERVED
IN THE BANKRUPTCY COURT.

     KEENAN: I KNOW IT WAS A TOUGH DECISION. LET ME ASK YOU, DO
YOU HAVE ANY REGRETS AS YOU LOOK BACK AT THE FLAWED DEREGULATION
PLAN THAT WAS PUT TOGETHER BACK IN THE MID-1990'S? ANYTHING THAT
YOU WOULD HAVE DONE OR DESIGNED DIFFERENTLY?

     DARBEE: WELL THE BIGGEST POINT THAT WE BELIEVE FIRMLY SHOULD
HAVE BEEN PURSUED WAS LONG-TERM CONTRACTS. WE ARGUED VIGOROUSLY
THAT ALL OF THIS POWER THAT WE CONSUME EVERYDAY SHOULD NOT BE
PURCHASED IN THE SPOT MARKET OR THE DAY-AHEAD MARKET. I TRULY
BELIEVE THAT IF WE HAD BEEN PERMITTED, AS WE WANTED TO, TO ENTER
INTO 10-YEAR CONTRACTS AT THE TIME WE WERE FORCED TO SELL OUR
POWER PLANTS, CALIFORNIA WOULD NOT BE IN THE POSITION THAT IT WAS
TODAY.

     KEENAN: ALL RIGHT, NOW PG&E CHAIRMAN ROBERT GLENN WAS SAYING
AS LATE AS 1998 THAT THE LONG-TERM TREND OF PRICES IS DOWN AND
THAT'S WHAT HE'S BASING THE BUSINESS ON. WHAT DIDN'T HE SAY?

     DARBEE: WELL I THINK THE LONG-TERM VIEW WAS THAT POWER
PRICES, UNDER COMPETITION, WOULD COME DOWN, AND I STILL BELIEVE
THAT THAT'S THE CASE. WHAT HAPPENED WAS, CALIFORNIA WENT THROUGH A
PERIOD OF UNPRECEDENTED GROWTH. OUR POWER DEMANDS INCREASED BY
ABOUT 30% AND AT THE SAME TIME, THERE WASN'T SUBSTANTIAL
CONSTRUCTION OF NEW POWER PLANTS. AND THESE TWO PATTERNS OF SUPPLY
AND DEMAND CAME TOGETHER IN A TERRIBLE COLLISION. WE FIRST
EXPERIENCED LAST JUNE, WHEN THE TEMPERATURE WENT UP VERY
SUBSTANTIALLY AND WE HAD SOME VERY BIG SPIKES IN THE THERMOMETER.

     KEENAN: ENRON, SOUTHERN, AND OTHERS -- THEY DIDN'T SUFFER
QUITE THE SAME COLLISION. DO YOU KNOW WHY?

     DARBEE: WELL, THEY ARE NOT UTILITIES. HERE IN CALIFORNIA,
ENRON IS REALLY NOT IN THE UTILITY BUSINESS. AND THEREFORE, THEY
WEREN'T SUBJECT TO THE REGULATIONS THAT WE WERE, WHICH FROZE RATES
AT A RETAIL LEVEL OF ABOUT 5 1/2 AND 6 CENTS A KILOWATT HOUR AND
LET WHOLESALE PRICES RISE UP TO 30 CENTS AND MUCH HIGHER THAN THAT
PER KILOWATT HOUR SO THEY WEREN'T IN THE POSITION TO GET CAUGHT IN
THE BIND AS WE WERE AS A RESULT OF THE REGULATION WE WERE UNDER.

     KEENAN: NOW SINCE THE DEREG, YOU GUYS HAVE SHIFTED ABOUT $4
BILLION FROM THE UTILITY TO THE PARENT COMPANY. HOW MUCH OF THAT
ASSET SHOULD REALLY BE HELPING THE UTILITY NOW?

     DARBEE: WE BELIEVE NONE. ABSOLUTELY NONE. WHAT HAPPENED IS WE
WERE REQUIRED TO SELL OFF OUR POWER PLANTS, AND JUST TO ENCOURAGE
US TO DO SOMETHING, WE WERE ASSIGNED A PUNITIVE RATE OF 6.77%
RETURN ON OUR EQUITY TO ENCOURAGE US TO DO THAT AS QUICKLY AS
POSSIBLE. THE PUBLIC UTILITY DID NOT WANT US TO HOLD ONTO THAT
EXCESS CASH. THEY WEREN'T ABOUT TO GIVE US A 12% RETURN ON IDLE
CASH BALANCES THAT WERE SITTING THERE, AND SO WE WERE ENCOURAGED
TO PASS THOSE ONTO OUR SHAREHOLDERS. THE BULK OF THAT MONEY WENT
TO REPAY DEBT AND CAPITAL GAINS TAX ON THOSE ASSETS AND THERE WAS
A RESIDUAL AMOUNT THAT WENT TO PAY DIVIDENDS, AS WELL AS BECAME
AVAILABLE FOR INVESTMENT IN OUR NATIONAL ENERGY BUSINESS.

     KEENAN: ALL RIGHT. WE HEAR YOU ON THAT ONE. PETER DARBEE,
WE'RE GOING TO HAVE TO LEAVE IT THERE. HE IS AGAIN, THE C.F.O. OF
PG&E.

     ***END OF TRANSCRIPT***