From: ann.schmidt@enron.com
Date: 2001-06-05 07:59:00+00:00
Subject: Enron Mentions

Surplus of Finger-Pointing In California Energy Crisis
The New York Times, 06/05/01

Price-Curb Plan: Is It California Dreaming? --- Regulators Again Tackle Power 
Market That Remains Chaotic
The Wall Street Journal, 06/05/01

TUNED IN 'Blackout' Tries to Shed Light on Crisis
Los Angeles Times, 06/05/01

Energy Alley to blame for California's woes? 
Houston Chronicle, 06/05/01

PBS pledge drive alters schedule 
Houston Chronicle, 06/05/01

PBS Shines Light on Energy Crisis
AP Online, 06/05/01

Senate to subpoena documents from power generators
Associated Press Newswires, 06/05/01

Panel OKs Subpoenas for Energy Companies Electricity: Special state Senate 
committee will demand pricing information in inquiry into whether California 
has been gouged.
Los Angeles Times, 06/05/01

Enron's Indian Creditors Seek to Save Dabhol Project (Update1)
Bloomberg, 06/05/01

ASIA-PACIFIC: Enron 'frustrated' by talks 
Financial Times; Jun 5, 2001

New Securities Issues
The Wall Street Journal, 06/05/01

India Lenders Mtg Seeks To Salvage Enron Dabhol Pwr Proj
Dow Jones Energy Service, 06/05/01

Developments in California's energy crisis
Associated Press Newswires, 06/05/01

Marathon joins Saudi gas venture 
Houston Chronicle, 06/05/01

India: Verbatim
Business Line (The Hindu), 06/05/01

Domtar buys G-P mills for $1.65B
The Daily Deal, 06/05/01

World Watch
The Wall Street Journal, 06/05/01

Environmentalists, Texas company in dispute over power money
Associated Press Newswires, 06/04/01

Newsprint Prices Seen Down As Weakness Persists In May
Dow Jones Commodities Service, 06/04/01

Alliance for Retail Energy Markets Media Statement In Response to the 
Assembly Democratic Caucus' ``Fair Plan''
Business Wire, 06/04/01

PBS Documentary Goes Inside the Utilities
CNN: Live This Morning, 06/04/01

Bush Aide, Ethics Agency Differ Over Stock Sale Delay (Update1)
Bloomberg, 06/04/01

Marathon Gets Enron's 20% Stake in Saudi Gas Project (Update1)
Bloomberg, 06/04/01






Business/Financial Desk; Section A
Surplus of Finger-Pointing In California Energy Crisis
By RICHARD A. OPPEL Jr.

06/05/2001
The New York Times
Page 1, Column 1
c. 2001 New York Times Company

Natural gas prices have plunged in the last few months -- everywhere, that 
is, but Southern California. While gas in New York costs about $4 per 
thousand cubic feet, gas delivered to Southern California still costs more 
than $11 wholesale. 
That such numbers demand an explanation was about the only thing President 
Bush and Gov. Gray Davis could agree on when they met in Los Angeles a few 
days ago to discuss California's energy crisis. Mr. Bush assigned Patrick H. 
Wood III, a fellow Texan confirmed last month as a member of the Federal 
Energy Regulatory Commission, to investigate.
To many experts, the woes of California's natural gas market are as profound 
as those of its electricity market: the state is short on pipelines, and the 
rules of the gas market, critics say, encourage sellers and traders -- 
including the biggest local gas utility -- to drive prices higher. 
At peak times, half of California's electricity is generated by gas-fired 
power plants, a higher proportion than in most parts of the country. And 
because 85 percent of the gas consumed in California comes from outside the 
state, the shortage of pipelines both into California and within the state 
has become a big handicap in fueling those plants. The strain has become 
especially acute as drought in the Pacific Northwest has curtailed imports of 
hydropower and gas-fired power plants have worked overtime to meet the 
demands of a booming state economy. 
Vice President Dick Cheney's energy policy report last month proposed 
initiatives to speed approval and construction of new pipelines, noting that 
New England and other regions faced capacity squeezes, too. The report says 
that the United States needs 38,000 miles of new gas transmission pipelines, 
almost a 20 percent increase. 
In the meantime, some industry executives and public officials take the 
argument one step further than the Bush administration, contending that 
today's shortage of capacity has made it possible for energy companies, 
intent on maximizing profits, to manipulate prices. 
''It really strains credulity to say this is a functioning market,'' said 
Representative Joe Barton, Republican of Texas, who as chairman of the House 
energy subcommittee has been leaning on the Federal Energy Regulatory 
Commission to scrutinize the California gas market. ''Reasonable people could 
conclude people have gamed the system.'' 
In one significant case, California utility regulators and Southern 
California Edison, one of the state's struggling electric utilities, have 
accused the El Paso Corporation of using its control of a major pipeline into 
the state to inflate prices artificially. El Paso officials deny wrongdoing 
and accuse California officials of making the company a scapegoat for the 
state's failure to build more pipelines. A judge at the federal energy 
commission is hearing the case in Washington. 
But fingers are pointing in other directions, too. 
For example, the Southern California Gas Company, the state's largest gas 
utility, has reaped huge profits buying and selling gas in the last year -- 
activity encouraged by state regulations intended to lower gas prices for 
consumers. But some gas marketers and electricity generators contend that the 
trading has contributed to price spikes, by tying up valuable pipeline space 
during peak times with gas shipments driven by financial deals, not power 
demands. 
At the same time, Edison says that Southern California Gas failed to put 
enough gas into storage last fall for residential and small-business 
customers. If so, that would have driven the gas company back into the market 
in the winter, when demand from power plant operators was high, helping push 
gas -- and hence electricity -- prices yet higher, Edison complains. 
Between them, El Paso and Southern California Gas were responsible for $3.7 
billion in excess prices for energy in the last year, Edison contends. 
Southern California Gas, a unit of Sempra Energy, denies that its trading has 
harmed the market. Rather, its executives note that electricity generators 
and industrial gas consumers -- which under state rules are responsible for 
managing their own gas supplies -- put very little gas into storage last 
year. By one estimate, large gas consumers in Southern California had only 11 
percent as much gas in storage at the end of November as they did at the same 
time during the prior two years. 
Another problem may emerge this summer, according to William L. Massey, a 
member of the federal energy commission. Mr. Massey said new commission rules 
intended to limit electricity price spikes in California will almost 
certainly prompt energy-trading companies -- which deal in both gas and 
electricity -- to manipulate gas prices. That is because the rules allow 
electricity generators to charge more if gas prices move higher. 
Similarly, growing attention is being paid to the role played by financial 
trading tied to the price of electricity and natural gas. Industry critics 
question whether huge trading volumes in these financial derivatives gives 
energy marketing companies the incentive to manipulate prices in tight 
markets. 
Federal regulators ''don't seem to understand that firms are really trying to 
make as much money as they can,'' said Severin Borenstein, director of the 
University of California Energy Institute, a research organization on the 
Berkeley campus. ''That's what they do for a living.'' 
Fixing the problem is simple, Mr. Borenstein said. ''If you build more 
capacity,'' he said, ''you reduce both the scarcity issue and you reduce the 
ability of people who currently own capacity to exercise market power.'' 
Regardless of whether companies are manipulating prices, the California 
natural gas market is fattening bottom lines. In the El Paso case, testimony 
has shown that pipeline capacity acquired by the company's marketing 
affiliate in March 2000 for $38.5 million produced profits of almost $900 
million over the next 13 months. 
El Paso said its share of those profits was $184 million, the rest going to 
other companies with which it entered into hedging transactions intended to 
limit El Paso's exposure if gas prices fell. About half of those transactions 
were with the biggest energy trader, the Enron Corporation, according to 
people present at briefings El Paso officials have given to California 
officials. 
An Enron spokesman, Mark Palmer, said it was possible that Enron took the 
other side of the trades, but he said that Enron would have resold the 
pipeline capacity almost immediately, thus profiting little from the rise of 
gas prices in California. 
Federal regulators, concerned that the high gas prices in California may not 
be legitimate, have proposed requiring companies selling gas in the state to 
disclose extensive data about their transactions. They are also considering 
whether to reimpose price caps on short-term sales of pipeline capacity that 
were eliminated early last year. 
Further, regulators are scrutinizing the so-called gray market in which 
energy marketers bundle gas and transmission capacity and sell it to large 
customers, like electricity generators, for one price. Federal regulators 
have oversight responsibility for the interstate portion of gas shipments, 
but they have not looked closely at these bundled transactions, Mr. Massey 
said. 
''The whole thing has fallen through the cracks,'' he said. 
Nearly all of California's gas comes from the Southwest, the Rocky Mountain 
states and Canada through a few huge, highly pressurized pipelines. In 
California, the gas is shunted onto intrastate pipelines that deliver it to 
consumers and to underground storage fields for later use. 
Those pipelines are now largely running full, and their capacity is about 300 
million cubic feet a day less than what interstate pipelines can deliver. The 
difference is the amount of gas it takes to continuously fuel a 1,300 
megawatt power plant -- enough to light more than a million homes. 
''It's not resources, it's straws -- the straws needed to suck this gas where 
it needs to go,'' said Thom Kelly, assistant executive director of the 
California Energy Commission. ''If the straws are full, that's a problem.'' 
Operators of interstate pipelines have proposed new construction that could 
double delivery to the state. Indeed, odd as it seems now, some in the 
industry worry that California could be ''overpiped'' later this decade, just 
as it was in the mid-1990's. 
Likewise, Southern California Gas plans only limited expansion of its 
in-state pipelines, partly because it expects demand to fall as hydroelectric 
power supplies return to normal levels and older, less efficient gas-fired 
power plants are phased out. 
But the gas company's intentions are regarded with skepticism by others in 
the industry. Some executives contend that Southern California Gas has 
damaged the marketplace through its enthusiastic embrace of a state program 
that allows it to split with customers the profits from buying, selling and 
lending gas. 
A coalition of power generators, including Reliant Energy, the Williams 
Companies and the Los Angeles Department of Water and Power, has complained 
to state officials that the program ''creates perverse incentives'' for the 
gas company. The generators say it results in extra demand for pipeline space 
when capacity already is at a premium, making prices more volatile. 
The consequences of the gas company's low storage inventories were evident in 
early December, according to John Stout, a senior Reliant executive. He 
recalled listening in on a conference call as a Southern California Gas 
official talked about injecting gas into storage. ''I was floored,'' Mr. 
Stout said. ''Prices were sky high, and they were putting more upward 
pressure on prices.'' 
Lee M. Stewart, president of energy transportation services for Southern 
California Gas, called the criticism ''bogus.'' The utility's storage and 
trading practices have neither hurt the market nor curtailed gas sales to 
customers, he said. 
''To say gas prices drive electricity prices is a falsehood,'' Mr. Stewart 
added. 
But to many regulators, it is clear that gas prices play an increasingly 
important role in electricity prices. 
Problems in the California natural gas markets ''haven't been given the 
prominence they deserve for the detrimental role they are playing in high 
electricity prices,'' said Linda K. Breathitt, another member of the federal 
energy commission. ''Natural gas prices have been the stepchild of this 
California crisis.'' 
This article is part of a joint reporting project with the PBS series 
''Frontline,'' which will broadcast a documentary about California's energy 
crisis tonight.


Photo: This Redondo Beach, Calif., power plant, owned by the AES Corporation, 
uses natural gas, as do almost half of the state's electric plants. About 85 
percent of the gas consumed in California comes from outside the state. 
(Agence France-Presse)(pg. C12) Chart/Map: ''A Vital Network Under Pressure'' 
Though California is crisscrossed by natural gas pipelines, capacity is 
limited, magnifying the state's energy woes. Half of California's electricity 
is generated by gas-fired power plants, and the shortage of highly 
pressurized pipelines both into California and within the state has become a 
big handicap in fueling those plants. (Source: California Energy 
Commission)(pg. C12) 

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


Economy
Price-Curb Plan: Is It California Dreaming? --- Regulators Again Tackle Power 
Market That Remains Chaotic
By John R. Emshwiller
Staff Reporter of The Wall Street Journal

06/05/2001
The Wall Street Journal
A2
(Copyright (c) 2001, Dow Jones & Company, Inc.)

Federal regulators have launched yet another attempt to control California's 
out-of-control wholesale electricity market. But like previous efforts, it 
could have limited effectiveness. 
Already, critics are predicting failure for the new "price mitigation" plan 
that the Federal Energy Regulatory Commission put into effect last week. The 
FERC's pricing plan is again "laced with loopholes," says California Gov. 
Gray Davis, who says that "it's worse than too little, too late."
Backers say the new initiative is more comprehensive and less susceptible to 
manipulation by power suppliers than previous efforts. They note that some 
electricity prices fell last week following implementation of the order. A 
spokeswoman for the California Independent System Operator, which runs the 
state's transmission grid and has been critical of the new FERC plan, says it 
is too early for her organization to evaluate the initiative's impact. 
FERC's new plan attempts to control prices during periods of relatively tight 
supply. In contrast to previous controls that had specific dollar targets, 
the new plan uses a fluctuating market price derived from production costs at 
California plants. Prices above this benchmark will be subject to FERC review 
and possible refunds by suppliers. 
The price-control efforts have been prompted by a botched 1996 California 
utility-deregulation plan that contributed to leaving the state with 
extremely tight power supplies. In May 2000, wholesale electricity prices 
began soaring. Power that previously fetched $20 to $40 a megawatt hour began 
trading for hundreds of dollars. 
Officials first tried price caps. For example, caps ranging from $750 down to 
$250 a megawatt hour have been in place at various times on the power that 
the ISO buys, at the last minute, to avoid shortages. During several hundred 
hours last summer, it appeared that the caps restrained some electricity 
prices from going higher, according to a recent study by the California State 
Auditor. 
The market became progressively tougher to control, though. Under the state's 
deregulation design, the vast majority of the power needs was to be purchased 
a day ahead of time. As the crisis worsened last year, suppliers and buyers 
began to see economic advantages from doing more transactions in the ISO 
real-time, last-minute market. Eventually, more than a quarter of the 
system's electricity needs were, at times, obtained through the ISO market, 
far more than ever anticipated. 
Having so many last-minute purchases endangered the reliability of the 
transmission system. To discourage transactions in the last-minute market, 
officials began ratcheting down the price cap there, lowering it to $250 in 
August. 
But suppliers apparently found ways to avoid the tighter cap. One such method 
is known as "megawatt laundering." Since the caps didn't apply to power 
coming from out-of-state suppliers, California generators had an incentive to 
sell power to a purchaser in another state, who could then quickly sell back 
the juice through the ISO at whatever the market would bear. 
After the ISO price cap went down to $250, so-called out-of-market 
transactions, which include out-of-state power purchases, soared to an 
average of 5,000 megawatts an hour by early December from almost nothing. At 
the same time, sales through the ISO's real-time market fell to a trickle. 
Prices of the out-of-market transactions in December averaged $461 a megawatt 
hour, nearly twice the price cap. 
Part of this surge might be explained by a sharp rise in the cost of natural 
gas, a major power-plant fuel. As rising fuel costs pushed up generating 
costs, producers had an added incentive for avoiding the California price 
caps, say some observers. 
Several state and federal investigations are looking for evidence of illegal 
manipulation in the skyrocketing prices for natural gas and electricity. Much 
electricity is sent out of state under perfectly proper, long-term 
arrangements. Even "megawatt laundering," though a pejorative phrase, isn't 
necessarily illegal unless it is part of a concerted effort to drive up 
market prices, say state and federal officials. 
Spurred by the rapid rise in out-of-market transactions, ISO officials 
abandoned the price cap in December. FERC then approved a "soft cap" 
price-control plan. Sales made at more than $150 a megawatt hour were subject 
to FERC review and possible refund orders if the price was found to be too 
far above the supplier's costs. So far, FERC has tentatively ordered over 
$100 million in refunds. Critics of that FERC soft cap say it was too 
generous in its calculations of production costs and far too limited in its 
scope. The cap only kicked in during a Stage 3 alert, when supplies were so 
tight that rolling blackouts were imminent. Some state officials and others 
argue that the FERC should be ordering billions of dollars in refunds for 
prices charged over the past year. 
The price-control feature of the new FERC plan covers more hours than the 
previous one but will still be restricted to times of relatively tight 
supply. Critics say controls should be in effect during all hours, since 
prices have often been high around the clock. 
Plus, the new plan still fails "to take any constructive steps to eliminate 
or even to minimize the pernicious effects of `megawatt laundering,'" says a 
recent ISO filing with the FERC. Out-of-state sales still aren't covered by 
the latest plan, which leaves suppliers with a large potential loophole for 
reaping higher power prices. The volume of out-of-market transactions has 
remained high this year. In April, the price for such deals averaged $372 a 
megawatt hour. 
Gov. Davis and others argue that price controls need to be extended 
throughout the Western U.S. In its decision unveiling the new control plan, 
FERC acknowledged that more may be needed on the laundering issue. It opened 
an investigation into sales transactions around the West. The terms of such 
sales, said the FERC decision, might not be "just and reasonable." 
--- Another Try

Main points of FERC price-mitigation plan:

-- Creates a price benchmark, based on production costs, to be used
in periods of tight electricity supplies. Sales at prices above
benchmark are subject to possible refunds.
-- Requires all generators in California to offer all available
capacity around the clock to the state's transmission-system operator.
-- Requires weekly reports from state officials to FERC regarding bid 
data and plant outages.
-- Initiates investigation into electricity trading in other Western
states.

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




Calendar; Entertainment Desk
TUNED IN 'Blackout' Tries to Shed Light on Crisis
STEVEN LINAN
TIMES STAFF WRITER

06/05/2001
Los Angeles Times
Home Edition
F-10
Copyright 2001 / The Times Mirror Company

With each passing day, there's seemingly a new surge in California's energy 
crisis. 
"Frontline" addresses that hot-button issue tonight in an hour aptly titled 
"Blackout" (9 p.m. KCET, 10 p.m. KVCR).
Through interviews with state and federal officials, utility executives and 
industry insiders, the documentary examines whether power companies and 
energy-trading giants have capitalized on deregulation to accrue enormous 
profits as consumers and business owners suffer power shortages and rising 
rate hikes. 
Jeff Skilling, CEO of the Enron Corp., the largest energy trader in the 
world, sees his company as one of the "good guys." 
"We are working to create open, competitive, fair markets," he tells reporter 
Lowell Bergman, who wryly notes that if true, lately the good guys have been 
winning since the past year has seen a large transfer of wealth from energy 
consumers to power sellers and traders like Enron. 
After raising the topics of deregulation and the bankruptcy of Pacific Gas & 
Electric, Bergman interviews S. Davis Freeman, the former Los Angeles 
Department of Water and Power chief, Gov. Gray Davis and Vice President Dick 
Cheney. 
There are no easy answers in this complex issue, with one side pointing 
fingers at the other, but one thing is certain: A long, hot summer is likely 
to yield more rolling blackouts for California consumers, while other states 
wait to see if they will be adversely affected as well. 
PHOTO: The "Frontline" documentary "Blackout" addresses California's energy 
crisis.; ; PHOTOGRAPHER: Associated Press 

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






June 5, 2001, 1:16AM
Houston Chronicle
Energy Alley to blame for California's woes? 
Frontline joins in Texas bashing on energy 
By ANN HODGES 
Copyright 2001 Houston Chronicle TV Critic 
Frontline joins hands with the New York Times tonight, to jump into what 
California Gov. Gray Davis has turned into a marathon news blast at Texas, 
and at Houston, over his state's energy woes. 
Frontline: Blackout, airing at 10 tonight, should have Davis and his 
bash-Texas troops giving each other high fives. 
In its opening minutes, Frontline's narration sets a tone for Texas-bashing: 
"Investigators (otherwise unidentified) claim that a handful of energy 
companies siphoned billions from consumers while the lights (in California) 
were out. 
"If you want to understand the story of electric power in America today, you 
have to follow the electrons and follow the money. It's a story that starts 
here, in Houston, Texas." 
The blame game is in high gear, as Frontline's dust-up hovers over Houston. 
Houston's Energy Alley, home of "electric cowboys" (Frontline's words), is 
the focus of this "follow-the-money" trail. 
And Ken Lay, chairman of Enron, "the 800-pound gorilla" in the Alley, gets 
the major grilling in its high-powered interview hot seat, along with Enron 
CEO Jeff Skilling. 
Interviewees also include Vice President Dick Cheney, California and federal 
officials, other company executives, industry insiders and what Frontline 
calls "whistle-blowers." 
Politics and finger-pointing fuel charges and countercharges, with Frontline 
correspondent and New York Times contributor Lowell Bergman conducting the 
interviews, and an off-camera narration spinning the sound and fury. 
With blackouts expected to hit New York this summer, "the entire country will 
soon be short on power," Frontline asserts to set the stage. 
"The generators have made more money than God. I mean, they've made 7, 8, 900 
percent profit," Davis charges. 
"Now that a fellow Texan sits in the White House," Frontline says, "the 
companies on Energy Alley are hoping things will only get better. ... Lay is 
a personal friend and big backer of President Bush, and he and his executives 
have been the Bush family's most generous contributors. ... " 
"There are a few of us that are still maybe idealistic enough to think that 
we can kind of support a candidate because we really believe in the 
individual," Lay counters. "We believe in their policies. We believe in the 
direction they are going to take the country." 
El Paso Corp., the largest natural gas company, gets its lumps, too, from 
California officials. The Federal Energy Regulatory Commission (FERC) was 
ready to dismiss California's complaint of price manipulation at the state's 
borders, Frontline says, "until Frontline and the New York Times obtained 
sealed documents revealing discussions at El Paso's highest levels." 
"Those documents are irrelevant," El Paso spokeswoman Peggy Heeg says. 
Frontline passes its golden opportunity to lay out, clearly and concisely, 
both sides -- what critics say are the self-inflicted origins of California's 
energy crisis, and California's charges of price-gouging and pleas for price 
caps. Instead, that information comes piecemeal, over the course of 
contentious and often-confusing exchanges. 
To avoid retreat on deregulation, now in progress in 24 states, companies 
have begun to raise the possibility of settlement with California, Frontline 
reports. In Lay's opinion, "It's still going to take a comprehensive 
settlement of the whole issue, all the issues" -- including money. 
Give Frontline full credit for stepping in where no other TV news outlet has 
dared to tread in such depth. Something is surely better than nothing. 
But this Frontline/New York Times team coverage effort does not cool the 
blame game. It sheds more heat than light. 
Frontline: Blackout, 10 tonight, 9 p.m. June 12 on Channel 8. Grade: B. 







June 5, 2001, 1:17AM
Houston Chronicle
PBS pledge drive alters schedule 
By MIKE McDANIEL 
Copyright 2001 Houston Chronicle TV Editor 
Paul Hope, like many theater fans, tuned to Channel 8 Sunday night in 
anticipation of the first hour of the joint PBS/CBS telecast of the 55th 
Annual Tony Awards. 
What he got instead was a travelog hosted by Rudy Maxa. Because this is 
pledge drive week, Channel 8 did not air the first hour of the three-hour 
award show, as it has in previous years. 
"Channel 8 has made Houston a theatrical cowtown by this decision," Hope, a 
resident actor at the Alley, said Monday. 
Alley artistic director Gregory Boyd called the preempting "absolutely 
indefensible and shocking." 
Fortunately, Channel 8 is being more flexible about a second program that it 
had originally decided not to air this week. 
Frontline, which airs nationally at 9 p.m. tonight, takes a hard look at 
California's energy problems and their direct connection to Houston. The 
telecast includes interviews with several Houston players, including Enron's 
Kenneth Lay. 
KUHT station manager John Hesse said Channel 8 became aware of the Frontline 
story, titled Blackout, and its Houston connection last week. Because of its 
local news value, the show will be tape-delayed and aired on KUHT at 10 
tonight. It will be repeated at 9 p.m. June 12, when Channel 8 originally had 
planned to air the show. 
"When we learned of the local significance, we obviously wanted that program 
to air (here) in a timely manner as in the rest of the country," Hesse said. 
"We are getting a little bit of heat for the Tony thing," Hesse said. "The 
problem is, it's right in the beginning of our pledge evening. We had a 
schedule in place, and a decision was made to stick to that schedule because 
that was our opportunity for fund raising." 
Fund drives are vital to keep the station operating and to purchase quality 
programming. 
"When we're scheduling our pledge dates, we try to coordinate the normal PBS 
schedule with what we determine will do the best for us in terms of fund 
raising," Hesse said. "We only use about 2 percent of our air time a year in 
fund-raising efforts, and when we're using that 2 percent, we have to make 
the most of them." 
That's no comfort to the folks who were hoping to experience what turned out 
to be theatrical history being made. Mel Brooks' The Producers -- not only 
the talk of Broadway but also the entertainment world -- won a record 12 
Tonys Sunday night. 
Most were awarded in the show's first hour -- where Tonys for director, 
choreographer and other categories are handed out. To diehards, the PBS 
portion of the Tonys exceeds CBS' in that it airs without commercials and 
includes behind-the-scenes interviews with directors, composers, designers 
and others. 
Hesse explained that Channel 8's pledge-drive dates were set before the 
station knew whether PBS would even have the Tonys. 
The first hour of Sunday's show had direct links to theater talents whose 
work has been seen and heralded in Houston. 
David Woolard, nominated for best costume design for The Rocky Horror Show, 
is costume designer of The Carpetbagger's Children, which opens Wednesday at 
the Alley. 
Doug Besterman, a winner Sunday for his orchestrations for The Producers, has 
done the same for the Frank (Jekyll and Hyde) Wildhorn productions that have 
played here. 
Doug Schmidt, a nominee in the scenic design category for 42nd Street, was a 
designer for the Alley's Civil War and A Christmas Carol. 
Hesse said, "We knew by the end of March" that PBS would co-host Sunday's 
show, and yet "the decision was made to stick with the schedule in place." 
Because the Tonys isn't "owned" by PBS, it could not be used as a pledge 
show, although Hesse conceded pledges could have been sought before and 
after. 
"There's nothing against the `rules,' " he said. "It's just been our normal 
method of operation here (to run the pledge drive at 7 p.m.) in terms of our 
prime-time evening pledge start." 
In a related development, NBC affiliate KPRC will not be showing the first 
episode of a new comedy series bowing tonight. Kristin, starring Kristin 
Chenoweth, is being pre-empted by Road to Redemption, a movie funded by the 
Billy Graham Crusade. 
Channel 2 made a decision in March to run the movie 7-8:30 tonight, KPRC 
general manager Steve Wasserman said. NBC has scheduled the premiere of 
Kristin for 7:30 p.m. and is not allowing it to air later in prime time, he 
said. 



PBS Shines Light on Energy Crisis
By LYNN ELBER
AP Television Writer

06/05/2001
AP Online
Copyright 2001 The Associated Press. All Rights Reserved.

LOS ANGELES (AP) - As California's energy crisis casts a widening shadow, 
PBS' "Frontline" helps illuminate the issue with a high-wattage documentary. 
"Blackout" is both a comprehensive report and a warning: California's power 
deregulation woes represent a national problem not destined for a quick or 
painless solution.
The hourlong film, with reporting by "Frontline" correspondent Lowell Bergman 
done in conjunction with The New York Times, airs 10 p.m. EDT Tuesday on PBS 
stations (check local listings). 
If you're a consumer frustrated by price hikes or concerned about what might 
happen in your state, "Blackout" should be considered required viewing. Major 
players, ranging from power company chiefs to consumer advocates to Vice 
President Dick Cheney, make their case on energy policy. 
Gov. Gray Davis and others grappling with California's flawed new system, 
which has inspired many states to put their own deregulation efforts on hold, 
are interviewed. 
"Blackout" also touches on alleged machinations involving the Federal Energy 
Regulatory Commission that could affect how much, if at all, the federal 
government will weigh in on power prices, and renews questions about 
corporate influence on the Bush administration. 
What ultimately emerges is a classic debate, framed in 2001 political 
realities, over whether an unfettered market is invariably the best approach 
or whether capitalism sometimes must bend to regulation. 
Bergman is adamant about the importance of understanding a power industry 
that has undergone massive change. 
"We've launched ourselves into a great economic and social experiment in the 
free market with a commodity that 65 years ago the country decided to put 
under heavy regulation because it was so vital," he said in an interview. 
"We've gone into this experiment without having a full national debate about 
what the consequences could be," Bergman said. "It may all work out, but it's 
clear that we're at least in a transition period where a lot of people are 
going to pay the price." 
In New York, for instance, blackouts are a possibility this summer and rate 
hikes of up to 40 percent a likelihood, Bergman said. 
There are those striking it rich in this bold new world. "Blackout" opens on 
Houston's "energy alley," home to new-breed power companies including what 
the documentary calls the 800-pound gorilla, Enron Corp. 
Enron, which has drawn attention because of chairman Kenneth Lay's close ties 
to President Bush, generates profits by serving as middleman between 
electricity makers and consumers. 
The world's largest energy trader, Enron sees from $2.5 billion to $3 billion 
in purchases and sales a day, according to its chief executive officer, Jeff 
Skilling. 
"We are doing the right thing," Skilling tells "Blackout." "We are working to 
create open, competitive, fair markets. ... We are the good guys. We are on 
the side of angels." 
If that's true, Bergman says in the film, the good guys have been winning: 
The past year saw a "vast transfer" of wealth from energy consumers to power 
sellers and traders like Enron. 
They are taking advantage of the end of an era: the federal regulatory system 
implemented by President Franklin D. Roosevelt in the 1930s to limit abuses 
by utility monopolies. 
In the 1980s, "Blackout" tells us, free-market proponents began pushing for 
an end to regulation. In 1992, a federal law was passed that allowed for 
states to deregulate electricity. 
There was broad but not unanimous support for such change. 
"It's OK for the price of fur coats to go up and down. ... It's not OK for 
the oxygen of life in this high-energy civilization," David Freeman, the 
former Los Angeles Department of Water and Power head and now state energy 
czar, tells "Blackout." 
Mark Cooper, director of research at the Consumer Federation of America, who 
notes there have already been price spikes in electricity in the Midwest and 
New England, says the outcome speaks for itself. 
"How do we go from $40 a megawatt for capacity in a regulated system to 
$1,000 in a deregulated system, and you're telling me I'm better off?" Cooper 
asks in the documentary. 
Enron's Lay weighs in on the other side. 
"I've yet to see any system in the world ... that over time does a better job 
of setting prices and allocating supplies than a competitive market," Lay 
says in "Blackout." 
He has a key philosophical ally in the Bush administration, which says 
increased supply and not federal intervention is the logical answer. 
"We're doing everything we can to help California on a short-term basis," 
Cheney says. "There's not a lot you can do. You can't manufacture kilowatts 
in the West Wing of the White House." 
Bergman, the former "60 Minutes" producer who was portrayed in the movie "The 
Insider," believes there is one certainty about the power crisis: The media 
generally has given it short shrift. 
"Unfortunately this story has been covered, particularly on television, in 
much the same way a car crash is covered. You never learn whether the car was 
safe or the highway was safe. You just see the blood and guts." 
"Nobody's spent the air time to explain to people how this all happened and 
why this may be coming to a neighborhood near you." 
--- 
On the Net: http://www.pbs.org/frontline

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


Senate to subpoena documents from power generators

06/05/2001
Associated Press Newswires
Copyright 2001. The Associated Press. All Rights Reserved.

SACRAMENTO, Calif. (AP) - The state Senate Rules Committee has agreed to 
issue subpoenas to eight out-of-state electricity generators, including two 
from Texas, demanding documents on bidding, pricing and other aspects of 
power sales in California. 
The subpoenas would help a special Senate committee's investigation into 
whether the companies are illegally profiteering from California's power 
crisis.
The committee's chairman, Sen. Joe Dunn, D-Santa Ana, said he expects the 
companies to resist, setting the stage for a court battle. Though energy 
executives seemed cooperative when the investigation was launched two months 
ago, they have since demanded that confidentiality protection for their 
documents, Dunn said. 
Energy executives deny that they've broken any laws selling electricity to 
California at record-high prices. 
Dunn's committee is looking within the state for answers as well. 
The Los Angeles Department of Water and Power could find its records 
subpoenaed if it doesn't provide information on its power sales. The manager 
of the state's power grid reported the DWP had made large profits by selling 
power to the rest of the state. 
The committee may even subpoena records from the state Department of Water 
Resources unless it turns over information on how it has spent more than $7 
billion to keep the state's lights on. 
The Legislature also needs information on the electricity the state DWP buys 
from wholesalers for the customers of the state's three largest 
investor-owned utilities, and the bidding strategies used to the make the 
bids, said Sen. Ross Johnson, R-Irvine, vice chairman of the rules panel. 
Davis has refused to release details of the deals, warning that if generators 
knew how much the state was spending on power they might raise their prices. 
Several news organizations and a legislator are suing to make the information 
public. 
The subpoenas will be issued to Reliant Energy of Houston, which Gov. Gray 
Davis has publicly accused of price gouging, Dynegy Energy Services Inc., 
Williams Energy, Houston-based Enron Corp., NRG Energy Inc., Duke Energy, 
Mirant Inc., and AES Corp. 
Dunn's panel needed approval of the rules committee to issue the subpoenas 
under Senate regulations. 
The committee won't issue the subpoenas for at least one-week, after the 
chairman of the Rules Committee, Senate President Pro Tem John Burton, D-San 
Francisco, opposed issuing subpoenas to the city and state departments, at 
least temporarily. 
--- 
On the Net: 
http://www.sen.ca.gov

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


California; Metro Desk
Panel OKs Subpoenas for Energy Companies Electricity: Special state Senate 
committee will demand pricing information in inquiry into whether California 
has been gouged.
CARL INGRAM; MIGUEL BUSTILLO
TIMES STAFF WRITERS

06/05/2001
Los Angeles Times
Home Edition
B-1
Copyright 2001 / The Times Mirror Company

SACRAMENTO -- The Senate Rules Committee agreed Monday to issue subpoenas to 
eight out-of-state power generating companies demanding documents on pricing, 
bidding and other aspects of electricity sales in the state. 
Sen. Joe Dunn (D-Santa Ana), chairman of the special Senate committee that is 
investigating whether power wholesalers are illegally profiteering from 
California's energy crisis, said he expects the companies to resist. That 
would set the stage for a court fight, he said.
In addition to subpoenas aimed at the private generating companies, the 
committee also put the Los Angeles Department of Water and Power on notice 
that unless it voluntarily provides information on its power sales to the 
state, the data will be subpoenaed as well. And the panel threatened to 
subpoena records of the state Department of Water Resources unless it turns 
over information on how it has spent more than $7 billion to keep electricity 
flowing in California. 
Under Senate regulations, Dunn's panel needed approval of the Rules Committee 
to issue the subpoenas. 
Industry executives deny that they have broken any laws in selling 
electricity at premium prices to California's financially strapped utilities 
and the state water department. 
The subpoenas will be issued to Reliant Energy, which Gov. Gray Davis has 
publicly accused of price gouging, Dynegy Energy Services Inc., Williams 
Energy, Enron Corp., NRG Energy Inc., Duke Energy, Mirant Inc., and AES Corp. 
Dunn said executives of the generators seemed cooperative when the 
investigation was launched two months ago. Since then, he said, they have 
raised barriers, including demands that the confidentiality of their 
documents be protected. 
The demand for information from the Los Angeles DWP and the state's water 
resources department were pushed by Sen. Ross Johnson (R-Irvine), vice 
chairman of the rules panel. 
"Why are we not attempting to subpoena the Los Angeles Department of Water 
and Power? There certainly have been suggestions that they have profited," 
Johnson said, referring to reports from the California Independent System 
Operator about large profits that DWP made by selling power to the rest of 
the state. 
Reflecting the views of many lawmakers, Johnson said the Legislature also 
needs information on power purchases that the state water department makes 
from wholesalers and the bidding strategies used to make the bids. 
Davis has refused to make details of the purchases public. He contends that 
if generators knew how much the state was spending on power, they might raise 
their prices. Several news organizations and a legislator are suing to make 
the information public. 
Senate President Pro Tem John Burton (D-San Francisco), chairman of the Rules 
Committee, opposed issuing subpoenas to the city and state departments, at 
least temporarily, leading to the agreement for a one-week delay before 
subpoenas would be issued to the agencies. 
The big energy companies also took a hit Monday from a leading advocacy group 
for the poor. 
The Pacific Institute for Community Organization, a coalition of faith-based 
groups that has pressed for California to cover more of the millions of 
working citizens without any health insurance, voiced concern that the energy 
crisis is hitting the poor hardest. 
The group, which scheduled a Capitol rally today, plans to urge political 
leaders to use the economic power of the state's huge pension funds to 
leverage the companies. 
The two pension funds own at least $1.2 billion in stocks and bonds in most 
of the major firms involved in the state energy crisis, from Enron of Texas 
to Duke of North Carolina, the advocates said. 
"They could bring the voice of stockholders into the debate, as a major 
stockholder, and take a more enlightened view of what is happening to 
California," said activist Jim Keddy. "We really have no voice inside those 
companies right now."

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


Enron's Indian Creditors Seek to Save Dabhol Project (Update1)
2001-06-05 02:40 (New York)

Enron's Indian Creditors Seek to Save Dabhol Project (Update1)

     (Adds importance of Dabhol Power for future investment in
India, in third paragraph.)

     Singapore, June 5 (Bloomberg) -- Industrial Development Bank
of India and other Indian banks that helped fund Enron Corp.'s
first investment in the nation are meeting in Singapore to try to
persuade international lenders to keep the $3 billion power
project alive.
     International banks such as ABN Amro Holding NV, Citibank NA,
a unit of Citigroup Inc., Bank of America and Credit Suisse First
Boston in April approved a decision by Enron unit Dabhol Power to
terminate its supply agreement with Maharashtra State Electricity
Board in a row over electricity prices.
     Unlike the Indian banks, foreign lenders received government
guarantees for about $600 million they lent to the project, which
is seen as a litmus test for future foreign investment in Indian
infrastructure projects. The Indian banks fear the foreign
creditors will cancel the project and invoke their guarantees.
     ``We will discuss how we can go about resolving the
problem,'' said R.S. Agarwal, an executive director at Industrial
Development Bank of India, or IDBI, the biggest lender to the
Dabhol project.
     The outcome of the two-day meeting, being held in the offices
of ABN Amro Holding NV, one of the biggest international lenders
to the project, will be crucial to the Indian banks, which have
lent as much as $2 billion to Dabhol.
     IDBI has exposure of 21.58 billion rupees ($460 million) to
the project, including 15.28 billion rupees in guarantees.
Dabhol, 65 percent owned by Enron, and the Maharashtra State
Electricity Board are in dispute over 3 billion rupees in unpaid
bills for December and January. Others bills through March have
been paid.
     The board has refused to pay the December and January bills
saying they should be lowered to reflect a 4 billion rupee penal
the board imposed on Dabhol for not supplying power at full
capacity on Jan. 28.
     India's government risks having to pay 170 billion rupees in
fines, resulting from guarantees it has offered on payments and
loans, if Enron pulls out of the project.
     The dispute Thursday prompted debt-rating company Fitch to
change its outlook on India to ``negative'' from ``stable.''
Fitch said the climate for foreign investors has deteriorated.



		

		
		

		
		ASIA-PACIFIC: Enron 'frustrated' by talks 
Financial Times; Jun 5, 2001
By JULIE EARLE and KHOZEM MERCHANT

		Enron, the US energy group, says it is becoming "increasingly frustrated" 
with its negotiations with the Maharashtra state government agencies in 
India. 
		The US energy group denied reports that it was renegotiating the contract and 
the tariff between its Indian arm, the Dabhol Power Company, and its sole 
customer, Maharashtra State Electricity Board (MSEB). "That is not true," 
said an Enron spokesman at the weekend. "Why would we renegotiate with 
counter parties? They are trying to imply a contract that was in place for 
eight years and operating for two years does not exist." The denial came as 
Indian and foreign banks prepared to try to bridge their differences over 
sustaining support for Dabhol's Dollars 2.9bn power project near Bombay, 
which has been supplying the Maharashtra utility. 
		A two-day meeting in Singapore starting today will aim to stake out common 
ground, which lenders hope will remove the uncertainty dogging the 
controversial 2,184MW power project. 
		The Indian utility owes Dabhol Dollars 45m (Pounds 32m) but is demanding in 
turn a greater sum in rebates for what it describes as the US company's 
failure to meet technical thresholds. 
		Lenders have stopped disbursing loans to the 1,444MW second phase of the 
project, which is due for completion soon. The 740MW first phase was 
commissioned in May 1999. ABN Amro and Bank of America are two of the banks 
that will thrash out the issues with State Bank of India, Industrial 
Development Bank of India and ICICI. 
		People close to the talks say the situation has "worsened" since the last 
lenders' meeting in April, when Dabhol received authorisation to quit the 
project. Dabhol has since issued a pre-termination notice, signalling its 
intent to withdraw in six months if a solution is not found. MSEB has 
responded to the threat by abandoning its power purchase contract with the 
company. 
		Copyright: The Financial Times Limited
		
		



New Securities Issues

06/05/2001
The Wall Street Journal
C17
(Copyright (c) 2001, Dow Jones & Company, Inc.)

The following were among yesterday's offerings and pricings in U.S. and 
non-U.S. capital markets, with terms and syndicate manager, based on 
information provided by Dow Jones Newswires. (A basis point is one-hundredth 
of a percentage point; 100 basis points equals a percentage point.) 
CORPORATE
Freddie Mac -- $300 million of notes was priced via lead managers HSBC 
Securities Inc., Bear, Stearns & Co. and Goldman, Sachs & Co., according to 
MCM CorporateWatch. Terms: amount: $300 million; maturity: Dec. 12, 2003; 
coupon: 5%; issue price: par; yield: 5%; settlement: June 12, 2001 (flat); 
call date: noncallable for six months. 
Freddie Mac -- auctioned $3 billion of one-month reference bills, as well as 
$4 billion of two-month reference bills. Terms: One-month(28): settlement: 
06/05/2001; maturity: 07/03/2001; Cusip: 313397HR5; price: 99.695111111; MM 
yield: 3.932. Two-month(56): settlement: 06/05/2001; maturity: 07/31/2001; 
Cusip: 313397JU4; price: 99.408888889; MM yield: 3.823. 
GLOBAL 
Monumental Global Funding Ltd. -- $100 million floating-fate notes at 
three-month Libor plus 38 basis points due Jun. 15, 2011 at 100.325 was 
priced via Westdeusche Landesbank. 
Tesco PLC -- GBP 150 million of 6% Eurobonds due Jun. 13, 2008 at 99.894, was 
priced via Morgan Stanley Dean Witter. Spread 68 basis points above 9% 2008 
gilt. Fees 0.325 point. 
General Motors Acceptance Corp. -- GBP 200 million of 6.375% Eurobonds due 
Dec. 7, 2007 at 99.689 was priced via Dresdner Kleinwort Wasserstein and UBS 
Warburg. Spread: 61 basis points above mid-swaps, 110 basis points above 
7.25% gilt due December 2007. Fees 0.35 point. 
Enron Corp -- offering a two-tranche floating rate and fixed-rated note 
totaling 50 billion yen. Tranche one: 40 billion yen at three-month London 
interbank offered rate plus 62 basis points due June 18, 2003 at par, via 
Merrill Lynch. Fees 0.35 point. Tranche two: 10 billion yen of 0.77 
fixed-rate notes due June 18, 2003 at par, via Merrill Lynch. Fees 0.35 
point. 
The Republic of the Philippines -- increases GBP 150 million floating-rate 
Eurobond at three-month dollar Libor plus 305 basis points due June 18, 2004 
at par to total $200 million, via Credit Suisse First Boston. Fees 0.27 point.

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



India Lenders Mtg Seeks To Salvage Enron Dabhol Pwr Proj
By Himendra Kumar
Of DOW JONES NEWSWIRES

06/05/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

NEW DELHI -(Dow Jones)- Indian institutions that have lent money to Enron 
Corp.'s (ENE) controversial Dabhol Power Co. are expected to make a 
collective bid to salvage the beleaguered power project during a two-day 
meeting this week in Singapore. 
Domestic lenders, which include the Industrial Development Bank of India, the 
State Bank of India (P.SBI) and ICICI Ltd. (IC), have the highest exposure to 
the DPC's US$2.9 billion project and are anxious not to see it collapse. The 
Dabhol Power project represents India's biggest foreign investment deal in 
India to date.
"We want the project to run," IDBI General Manager R.M. Ganatra told Dow 
Jones Newswires ahead of the meeting. 
"The Indian lenders will make a common cause at the lenders' meeting to 
prevent Enron from pulling out. The Indians have lent US$1.4 billion out of 
the project's total projected cost of US$2.9 billion. As IDBI's own exposure 
is in the excess of 20 billion rupees (US$1=INR47.01), the bank runs the risk 
of going deep into the red if this project goes bust," he said. 
Indian lenders have mutually decided to block further loans to Dabhol's 
second phase until an agreement was reached, Ganatra added. Dispute Has 
Unnerved Foreign Lenders 

The Dabhol Power project, situated in the western state of Maharashtra, will 
generate 2,184 megawatts of electricity when the second phase is scheduled to 
be completed later this year. 
Texas-based Enron has a 65% stake in DPC and is the project's largest 
shareholder. Other shareholders include the Maharashtra State Electricity 
Board, or MSEB, with 15%, General Electric Co. (GE) and Bechtel (X.BTL) with 
10% each. 
Enron is at the center of a power supply dispute between the state government 
and Dabhol Power over what the government claims are "unaffordable" power 
tariffs. 
The dispute has unnerved foreign lenders. Domestic lenders at this week's 
meeting in Singapore are expected to try and calm frayed nerves. 
Ganatra, together with other domestic lenders, feel the dispute between DPC 
and its sole buyer MSEB is still resolvable despite DPC's issue of a 
preliminary termination notice in April. 
He said the fundamental issue in the dispute was the cost of power and added, 
"There was need for an agreement on a reasonable tariff." 
Dabhol has come under fire because of the relatively high cost of its power. 
Critics object to Dabhol charging INR7.1 a kilowatt-hour for its power, 
compared with INR1.5/kwh charged by other suppliers. 
Domestic lenders want the federal government to clear MSEB's defaults of 
US$48 million and also find additional buyers for DPC's electricity, possibly 
the state-owned power utility like National Thermal Power Corp. Ltd. (P.NTP), 
from the second phase of the Dabhol project. 
Ganatra also urged the federal government to take a more active role in 
conflict resolution. "The government should not shirk its responsibility and 
it should set a time limit for the MSEB and DPC to sort out their dispute 
with the lenders' interests in mind," he said. 
-By Himendra Kumar, Dow Jones Newswires; 91-11-461-9427; 
himendra.kumar@dowjones.com

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


Developments in California's energy crisis

06/05/2001
Associated Press Newswires
Copyright 2001. The Associated Press. All Rights Reserved.

Developments in California's energy crisis: 
TUESDAY:
- A leading advocacy group for the poor tells state leaders to use the 
economic power of the state's huge pension funds to leverage power companies. 
The Pacific Institute for Community Organization says the two pension funds 
own at least $1.2 billion in stocks and bonds in most of the firms that sell 
electricity to California. 
MONDAY: 
- A special Senate committee investigating whether out-of-state power 
companies are illegally profiteering the state's power crisis gets permission 
from the Senate Rules Committee to subpoena documents from the companies 
detailing bidding, pricing and other aspects of their electricity sales to 
the state. The committee plans to subpoena Mirant, Dynegy, Williams, AES, 
Duke, Enron, NRG and Reliant, and could also issue subpoenas to the Los 
Angeles Department of Water and Power and the state Department of Water 
Resources to access details of their power selling and buying processes, 
respectively. 
- The state's grid operator says California's electricity production should 
improve in the coming weeks as more power plants come back on line after 
spring maintenance shutdowns. That, coupled with conservation efforts, could 
help during this summer's high temperatures, independent observers say - but 
not enough to stave off blackouts. 
- The state's expanded Low Income Home Energy Assistance Program (LIHEAP) 
program begins with $120 million in state money. It is aimed at helping 
working poor households, senior citizens, disabled persons, migrant seasonal 
farm workers, limited-English-speaking persons and households with very young 
children whose incomes fall at or below 250 percent of the federal poverty 
level. 
That includes households with four members having an annual gross income of 
$44,125 or less; three-member households earning $36,575 or less; two-member 
families earning $29,025 or less; and individuals earning under $21,475. 
Further information is available at www.csd.ca.gov or at 1-800-433-4327 
(HEAP). 
- Ten schools in three Southern California districts cut their electricity 
waste up to 18 percent through the Alliance to Save Energy's Green Schools 
Program. Together, the schools saved more than $51,000 over about eight 
months by changing their usage habits, according to Southern California 
Edison, which sponsored the program. More information is available at 
www.ase.org/greenschools. 
- Critics tell the San Jose Mercury News that the federal agency overseeing 
California's electricity market needs to add resources and become more 
aggressive in watching for energy price gouging, issuing subpoenas for 
company documents if necessary. The Federal Energy Regulatory Commission has 
been accused of backing off investigations after energy generators have 
resisted, prompting some FERC officials to say their own system is flawed. 
- The FERC issues a statement saying it won't act on a request from small 
power generators to block a March 27 decision from the state Public Utilities 
Commission that has lowered the price they can charge for electricity. FERC 
says it won't step in because the matter is still pending at the PUC. 
- No power alerts Monday as electricity reserves stay above 7 percent. 
- Shares of Edison International closed at $10.58, down 42 cents. PG&E Corp. 
closed at $11.40, down 25 cents. Sempra Energy, the parent company of San 
Diego Gas & Electric, closes at $27.34, up 20 cents. 
WHAT'S NEXT: 
- Davis' representatives continue negotiating with Sempra, the parent company 
of San Diego Gas and Electric Co., to buy the utility's transmission lines. 
-In federal bankruptcy court Tuesday, Pacific Gas and Electric will ask U.S. 
Bankruptcy Judge Dennis Montali to stop the manager of the state's power grid 
from buying electricity for utility or charging it for any electricity bought 
after the utility filed for bankruptcy on April 6. 
THE PROBLEM: 
High demand, high wholesale energy costs, transmission glitches and a tight 
supply worsened by scarce hydroelectric power in the Northwest and 
maintenance at aging California power plants are all factors in California's 
electricity crisis. 
Edison and PG&E say they've lost nearly $14 billion since June to high 
wholesale prices the state's electricity deregulation law bars them from 
passing on to consumers. PG&E, saying it hasn't received the help it needs 
from regulators or state lawmakers, filed for federal bankruptcy protection 
April 6. 
Electricity and natural gas suppliers, scared off by the two companies' poor 
credit ratings, are refusing to sell to them, leading the state in January to 
start buying power for the utilities' nearly 9 million residential and 
business customers. The state is also buying power for a third investor-owned 
utility, San Diego Gas & Electric, which is in better financial shape than 
much larger Edison and PG&E but also struggling with high wholesale power 
costs. 
The Public Utilities Commission has approved average rate increases of 37 
percent for the heaviest residential customers and 38 percent for commercial 
customers, and hikes of up to 49 percent for industrial customers and 15 
percent or 20 percent for agricultural customers to help finance the state's 
multibillion-dollar power buys.

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






June 5, 2001
Houston Chronicle
Marathon joins Saudi gas venture 
Company replacing Enron in partnership 
By TOM FOWLER 
Copyright 2001 Houston Chronicle 
Houston-based USX-Marathon Group has taken over Enron Corp.'s abandoned stake 
in a $25 billion natural-gas venture in Saudi Arabia. 
Marathon, the fourth-biggest U.S. oil company, will join project leader Exxon 
Mobil Corp. and Occidental Petroleum Corp. in the "Red Sea Consortium," one 
of three exploration and development projects under the larger venture. 
Enron originally was named part of the deal, but on Friday the company pulled 
out without explanation, giving up its 20 percent stake in a portion of the 
project that initial estimates value at around $5 billion. 
Marathon was one of more than a dozen companies that bid on the project 
initially and one of several that did not make the final cut announced two 
weeks ago. 
Marathon, which has a long-standing relationship with the Saudis as a crude 
oil customer, had officials in Saudi Arabia for Sunday's signing ceremony, 
along with Exxon, Occidental, the Royal Dutch/Shell Group, BP, TotalFinaElf 
Houston-based Conoco and Phillips Petroleum Co. 
The projects are the first gas-exploration business Saudi Arabia has offered 
to international companies in 20 years. The country wants to convert its 
oil-powered utilities to run on cheaper natural gas, but needs international 
investments because of two decades of budget deficits. 
The gas business may not offer the companies the best profit margins compared 
with other projects, but it may give them a lead over rivals if Saudi Arabia 
lets international companies develop crude-oil reserves. 
The companies are expected to spend $17 billion on the biggest project and 
about $4 billion on another. The size of the Red Sea project still is 
unclear, Marathon spokesman Roger Holliday said. 
"My understanding is there's exploration involved, and the final scope of the 
project will be determined later," he said. 
Saudi officials liked some of the creative proposals Marathon included in its 
initial failed bid for the work, Holliday said, and indicated previously that 
there could be some potential work for the company. 
Enron's departure from the deal last week surprised many analysts, but is 
somewhat consistent with the company's decreasing emphasis on infrastructure 
projects. 
Enron withdrew from a $3.5 billion pipeline project to export natural gas 
from Qatar last month, while other international projects have proved to be 
difficult. A power-generation project in India has run into trouble because 
of disagreements between Enron and the Indian government over electricity 
prices, and Enron officials said Friday that a $130 million power plant 
project in Ontario may be in jeopardy because of the provincial government's 
foot-dragging over electricity deregulation. 
"I'm dumbfounded that they would pull out of a major project announced only 
two weeks ago," Goldman, Sachs & Co. analyst David Fleischer told Bloomberg 
News. "On the other hand, they're more of a services company than an energy 
company these days." 
Enron appears to be focusing on its rapidly growing commodity trading 
business, which includes trading natural gas, electricity, broadband Internet 
capacity and even such items as broadcast advertising time. 




India: Verbatim

06/05/2001
Business Line (The Hindu)
Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - 
Asia Intelligence Wire

"I do not see any conspiracy from here." 
Prime Minister A.B.Vajpayee, when asked by mediapersons to comment on the 
"conspiracy theory" doing the rounds on the royal bloodbath in Nepal.
"I have never met Bill Gates, and I'm not likely ever to do so. So at the 
risk of sounding too predictable, I would have to start by recommending the 
works of William Shakespeare. .. He invented himself so brilliantly that he 
invents all the rest of us." 
Literary critic Harold Bloom, when asked by the Harvard Business Review, what 
kind of literature he would recommend to Bill Gates. 
"In January they declared that anyone converting to Christianity would be 
executed. In March, the Taliban proudly set about the destruction of two 
enormous Buddhas... Now Hindus in Afghanistan will have to wear a badge or 
label to distinguish them from Muslims. Soon there will be no more religions 
for the Taliban to insult." 
An editorial in The Economist, saying "it's high time their Islamic friends 
reined in the Taliban." 
"One should not be euphoric... The summit meeting will hopefully generate a 
dialogue process." 
Pakistan's High Commissioner to India Ashraf Jehangir Kazi, on the proposed 
Indo-Pak summit in New Delhi, addressed the Indian Women's Press Corps. 
"It will be in the interest of Maharashtra if the company is asked to leave 
India." 
Narmada Bachao Andolan leader Medha Patkar, demanding that Enron's Dhabol 
Power company should be asked to "pack off from India" without any 
compensation, addressing a press conference in Pune. 
"We are down but not out. The DMK will rise again to face the next electoral 
battle. We require five years to nurse the wounds suffered by us in this 
election." 
DMK president M.Karunanidhi, addressing a public meeting organised by his 
party in Chennai to celebrate his 78th birthday.

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


M and A
Domtar buys G-P mills for $1.65B
by Soma Biswas

06/05/2001
The Daily Deal
Copyright (c) 2001 The Deal LLC

Georgia-Pacific Corp.'s acquisition of the four pulp and paper mills 
transforms the company into the second-largest producer of uncoated freesheet 
in North America. 
http://www.domtar.com/domtar/english/newsrel.htm on Monday announced a final 
deal to buy four pulp-and-paper mills from Georgia-Pacific Corp. for $1.65 
billion.
For Montreal-based Domtar, the acquisition transforms the company from the 
seventh-largest producer of uncoated freesheet (used as printing and copying 
paper) in North America into the second-largest producer. It also becomes the 
third-largest producer of uncoated freesheet in the world, behind 
International Paper Co., of Purchase, N.Y., and Singapore-based Asia Pulp & 
Paper Co. 
The acquisition will boost Domtar's revenues to C$6 billion ($3.9 billion) 
from C$4 billion, of which 75% will come from the U.S. 
Atlanta-based Domtar's shares rose 60 cents per share on the New York Stock 
Exchange to $15.75, and Georgia-Pacific's shares fell 10 cents per share to 
$35.30 per share. 
The company will raise debt and equity worth $900 million in the public 
markets, including a secondary share offering in the U.S. The price includes 
$200 million in working capital expenses Domtar is paying to take on the 
inventories and accounts receivable at the four mills, which allow the 
company to get a favorable tax treatment on the deal as an asset purchase. 
For Georgia-Pacific, the sale of the mills in Ashdown, Ark., Nekoosa and Port 
Edwards, Wis., and Woodland, Maine, raises much-needed funds to pay down debt 
accumulated since it bought out Fort James Corp., a Deerfield, Ill.-based 
maker of consumer tissue brands, in July 2000 for $11 billion. 
The sale also rids the company of some assets that are subject to volatile 
price cycles. "It's a move to tie less assets to the white paper business," 
said Greg Guest, a spokesman for Georgia-Pacific. 
Georgia-Pacific is also selling two pulp mills in Brunswick, Ga., and New 
Augusta, Miss., and its specialty chemical unit, which makes formaldehyde and 
urea resins used to glue plywood and other building materials. 
Georgia-Pacific's specialty chemical business had drawn interest from 
Chicago-based Akzo Nobel Inc. and Borden Inc. 
The company said it will continue to operate four mills that make branded 
imaging, printing and publishing and specialty papers. 
Georgia-Pacific had previously put three mills, including the Woodland plant, 
up for sale. Although interested buyers included Enron Corp., 
Georgia-Pacific, which is under pressure to reduce its $14.8 billion debt, 
failed to reach a satisfactory deal with them. 
Of the four mills Domtar gets, the one in Ashdown is the crown jewel -- 
considered the best facility of its type in North America and the biggest of 
the four mills with capacity of 825,000 tons. 
Georgia-Pacific was advised by Carl Contigulia at Morgan Stanley, and Domtar 
by Kenneth Boone at J.P. Morgan Chase & Co., with Debevoise & Plimpton as 
legal counsel. 
http://www.thedeal.com

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


International
World Watch
Compiled by David I. Oyama

06/05/2001
The Wall Street Journal
A16
(Copyright (c) 2001, Dow Jones & Company, Inc.)

BRIEFLY: 
-- Foreign and Indian lenders to Dabhol Power, the Indian unit of U.S. energy 
company Enron, begin a two-day meeting today in Singapore to try and settle 
differences over continued support of Dabhol's $2.9 billion power project 
near Bombay, torn by a dispute between Dabhol and the Maharashtra State 
Electricity Board over nonpayment of bills and power charges. 
-- India's mobile-phone market in April grew 89% from a year earlier to 3.7 
million subscribers, a local trade association said. 

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


Environmentalists, Texas company in dispute over power money
By DIANE SCARPONI
Associated Press Writer

06/04/2001
Associated Press Newswires
Copyright 2001. The Associated Press. All Rights Reserved.

NEW BRITAIN, Conn. (AP) - Most people's monthly electricity bill includes a 
dollar or two to help people and businesses conserve energy. 
These dollars go into a conservation fund that last year added up to $85 
million. The money is spent by electric utilities to promote the use of 
insulation, power-thrifty appliances and other means to save power.
A new proposal to spend some of this public money has led to a huge fight 
among environmentalists, utilities, a global energy firm and a company whose 
technology could be as revolutionary as Edison's light bulb. 
The technology is a fuel cell, a kind of low-polluting, efficient power plant 
that generates electricity by an electrochemical process, instead of by 
simply burning fuel. 
Enron North America Corp., a subsidiary of Texas-based Enron Corp., is 
working with the Connecticut Resources Recovery Authority to build a small 
fuel cell power farm. 
These partners want to take $125 million out of the conservation fund over 
five years to buy and install fuel cells from FuelCell Energy Inc. of 
Danbury. 
The fuel cells would generate about 26 megawatts a year - enough power to 
serve about 8,000 homes. The CRRA would sell the power. 
The technology - while still untested in commercial use - has the potential 
to revolutionize the way people and businesses get power. 
They also will satisfy Connecticut law to diversify the power mix and make 
Connecticut the fuel cell capital of the world, its supporters said. 
"It takes public funding to enable these technologies to come out of the 
space age and down to earth," said Jerry Leitman, chief executive and 
president of FuelCell Energy. 
Critics of this plan are attacking the deal from every angle. 
Enron, which rolled in $101 billion in revenues last year, bought $5 million 
worth of stock in FuelCell Energy in October. 
The company also has an agreement with FuelCell Energy to buy 55 megawatts 
worth of fuel cells over the next two years. If Enron does make the purchase, 
it gets an additional 1.3 million shares in FuelCell Energy. If not, Enron 
pays a penalty. 
Critics argue the plan would divert $125 million from proven energy 
conservation programs that last year saved 63 megawatts. 
And, they said, the conservation fund is not meant to be spent on alternative 
fuel technology, no matter how promising it may be. 
"To come in with a $100 billion company like Enron and use ratepayers' money 
to pay for the cost when they have sweetheart deal with FuelCell Energy - 
this is not the way the system is supposed to work," said Dan Sosland, 
executive director of Environment Northeast, a nonprofit group that sits on 
an advisory committee for the conservation fund. 
"If they think this is such a great thing, and if Enron made $100 billion 
last year, why are not putting up any of their own capital?" he asked. 
Enron, CRRA and FuelCell Energy reject the notion theirs is a sweetheart 
deal. 
CRRA, which operates trash-to-energy plants, wants to explore fuel cells as a 
way to use the gas that is produced from landfills, Robert Wright, the 
president of the quasi-public agency, told the DPUC. 
Connecticut law allows conservation fund money to be spent to develop fuel 
cells and other technologies as a way to improve the environment and 
encourage competition for electric customers, said Enron spokesman Eric 
Thode. 
"It fits perfectly with what conservation programs in Connecticut are trying 
to do," Thode said. 
Enron and the CRRA have asked the Department of Public Utility Control to 
approve their plan. 
If the project fails, Enron executives told the DPUC it would repay the 
conservation fund. If the project succeeds, it will improve the state's 
energy mix with a revolutionary technology from a homegrown company. 
Sosland noted that if the project succeeds, it will still generate less power 
than the state could have saved through existing conservation programs. If it 
succeeds, the Enron benefits financially. 
The agency has begun hearings into the proposal. Another hearing is scheduled 
for June 19, and a draft decision is due July 26. 
Enron is trying to take advantage of environmental provisions in the state's 
electric deregulation law. The law requires businesses that sell power in 
Connecticut to get a certain percentage of their power from renewable 
resources, such as wind or solar power. 
Fuel cells are also considered renewable, although they do use a fuel such as 
natural gas or methane. Unlike power plants that burn natural gas to generate 
power, fuel cells use chemical reactions with the gas to generate 
electricity. 
A 3-megawatt plant of fuel cells developed by FuelCell Energy is about the 
size of a tennis court and about one story high. It would serve about 900 
homes, or an office building, an apartment building a factory or some other 
use. 
Leitman also argued that the $125 million will help develop Connecticut's 
fuel cell industry and create jobs. 
"For the state of Connecticut to spend money to make Connecticut to fuel 
cells what Silicon Valley is to computer chips ... makes good sense," he said.

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


Newsprint Prices Seen Down As Weakness Persists In May
By Zahida Hafeez
Of DOW JONES NEWSWIRES

06/04/2001
Dow Jones Commodities Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

CHICAGO --(Dow Jones)- With publishers still sitting on heavy inventories, 
summer won't be a pleasant one for newsprint producers, who have tried very 
hard in recent weeks to stick to their word on prices by maintaining supply 
discipline. 
April's weak newsprint consumption figures and projection of continuing 
softness in May have forced producers to invoice orders at prices discounted 
$10 to $20 a metric ton below the current list price of $635 a ton, experts 
note.
But although prices are expected to come down further as large publishers 
completely ignore large producers and hunt for even lower prices from 
alternative sources, more production cuts announced after the latest market 
data for April were released could temper the decline in prices. 
Following April data, which showed production slightly outpacing shipments, 
Abitibi-Consolidated Inc. (ABY) announced production cuts of 150,000 tons to 
be taken in the second quarter. This, on top of permanently removing 180,000 
tons from the market, completed the 400,000 tons of permanent cuts the 
largest newsprint-maker in the world promised when it bought Donohue Inc. 
last year. 
Norske Skog Canada Ltd. (NS.A) also announced it would cut production by 
24,000 tons by mid-July. 
What impact will these supply cuts have on the market? 
Because only roughly 80,000 tons of Abitibi's production cuts have so far 
materialized, estimates Reid Carter, analyst with National Bank Financial in 
Vancouver, the impact is restricted to buyer psychology. 
"This demonstrates that (Abitibi) is willing to do whatever it takes...and 
that's providing the base support for pricing," said Carter. 
Publishers indeed seem a little taken aback by the swift producer response. 
"(Abitibi's downtime plans) have gotten publishers sitting up and taking 
notice," conceded a purchasing executive at a Midwestern daily. "But 
publishers are curious to see if (the production cuts) will correct the 
market," he said, adding, "If there is still excess newsprint available, then 
publishers will push for a lower market." 
Slowing advertising lineage, which according to the latest data, fell 3.4% in 
March, is one reason for the publishers' firm conviction that prices will 
keep coming down. The other reason is the presence of a nontraditional supply 
source. 
Power marketer and provider of financial hedging instruments, Enron Corp. 
(ENE) has increased its presence in the pulp and paper arena, the publisher 
executive said, allowing publishers another newsprint source. As a result, 
some large publishers haven't bought much from the large producers, as the 
war between the two sides continues, the executive added. 
Moreover, some of the trends of a soft market, such as more tonnage being 
passed to brokers, extra effort by producers to increase exports and to 
funnel tonnage to secondary markets, are kicking into motion, market watchers 
said. 

May Newsprint Data Look Just As Weak As April's 

Total U.S. consumption, which fell 16.3% year-over-year in April, according 
to the Pulp and Paper Products Council, is expected to continue descending in 
May, National Bank's Carter said. The figures for May will be released in the 
last week of June. 
However, the recently announced production cuts will bring mill operating 
rates down to roughly 87% in May, Carter added. This compares to operating 
rates in April of 92%, which dropped from 96% in April, 2000. 
Carter also believes producer inventories will be flat so that total monthly 
inventories will be flat to lower, but not low enough to help prices. 
Analysts say more market-related downtime needs to occur to keep the market 
in shape. After all, inventory levels are currently 1.7%, or 30,000 tons 
above the 10-year average level for April of 1.815 million tons. 
In April, consumer inventories fell 24,000 tons, while on the mills end, they 
rose 23,000 tons for a combined total of 1.845 million tons, the PPPC said. 
"Producers other than Abitibi, Bowater and Norske Skog will have to take more 
downtime," said Stephen Atkinson, analyst with BMO Nesbitt Burns Inc. in 
Montreal. He said the cuts so far have halted a price drop underway since 
March. 
But, Atkinson is self-admittedly more optimistic on newsprint prices and the 
strength of the market than are analysts in general. 
Mark Wilde, analyst with Deutsche Bank Alex. Brown in New York, said in a 
research note, "We do not believe that prices will stay at these levels for 
another month, but with continued supply discipline, producers may be able to 
hold prices until the seasonal pickup." Demand slows seasonally in the summer 
months and returns in September. 
Publishers, scoff at the notion of prices stabilizing. 
"If the price is coming down in March, April and May, what's it going to do 
in June and July when consumption historically falls?" said the Midwestern 
publisher's purchasing executive, who said inventory levels at his newspaper 
had risen considerably in May to 55 days of supply. "I'll be curbing 
shipments," the executive said. 
The PPPC's data show all U.S. users, including dailies, held 1.419 million 
tons of stocks, or the equivalent of 50 supply days in April, which is up one 
day from March and 12 days from the year-ago period. 
-By Zahida Hafeez, Dow Jones Newswires; 
312-750-4132; zahida.hafeez@dowjones.com

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


Alliance for Retail Energy Markets Media Statement In Response to the 
Assembly Democratic Caucus' ``Fair Plan''

06/04/2001
Business Wire
(Copyright (c) 2001, Business Wire)

SACRAMENTO, Calif.--(BUSINESS WIRE)--June 4, 2001--Alliance for Retail Energy 
Markets (AReM) released the following statement today in response to media 
inquiries about the Assembly Democratic Caucus' recently proposed "Fair Plan" 
which provides an alternative policy blueprint to the Governor's Southern 
California Edison MOU. 
We are pleased to see that the Assembly Democrats are committed to finding a 
workable solution to California's energy crisis that includes restoring large 
users' access to the retail energy market. While the Caucus' proposal is a 
crucial first step and should be commended for recognizing the importance of 
creating a healthy retail market for California consumers, AReM must note two 
specific concerns with the proposed plan.
First, the plan fails to address small and residential customers' right to 
access the retail market. Certainly all consumers deserve the opportunity to 
take advantage of the benefits of retail energy options and to take control 
of their own energy futures. 
Second, the plan should not arbitrarily assign past debt costs to any one 
class. AReM suggests that any comprehensive solution be structured in a way 
that is fair for all parties. Any charges imposed to recover the costs of 
purchased power should be allocated to each customer group based on the costs 
that group has incurred. Without such fair allocations, the proposed plan may 
unintentionally create a barrier that discourages customers from utilizing 
the retail energy market altogether. 
The Alliance for Retail Energy Markets looks forward to working with the 
Caucus and the entire Legislature to incorporate a truly viable retail energy 
market policy into the comprehensive energy solution for California. 
Alliance for Retail Energy Markets (AReM) is a coalition whose member 
companies include AES NewEnergy, Inc., Commonwealth Energy Corp., Enron 
Energy Services, Inc., GreenMountain Energy Company, The New Power Company, 
Shell Energy Services, and Strategic Energy, L.L.C.


CONTACT: Edelman PR for Alliance for Retail Energy Markets (AReM) Tracy 
Fairchild, 916-442-2331 or 916/835-9007 (cell) tracy.fairchild@edelman.com 
Erica Manuel, 916/442-2331 or 916/201-5029 (cell) erica.manuel@edelman.com 
15:53 EDT JUNE 4, 2001 

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


News; Domestic
PBS Documentary Goes Inside the Utilities
Daryn Kagan

06/04/2001
CNN: Live This Morning
(c) Copyright eMediaMillWorks, Inc. (f/k/a Federal Document Clearing House, 
Inc.). All Rights Reserved.

The problems behind California's power crisis are the focus of a documentary 
on the PBS program "Frontline." The documentary looks at California's 
deregulation process, and how that will affect similar programs nationwide. 
DARYN KAGAN, CNN ANCHOR: The problems behind California's power crisis are 
the focus of a documentary on the PBS program "Frontline." Here's a brief 
clip from the program called "Blackout."
(BEGIN VIDEO CLIP, PBS' "BLACKOUT") 
UNIDENTIFIED MALE: We had had a problem with one unit going out at 1:30 in 
the morning. We immediately then into our reserves, pulled down hydro. It 
became evident that nobody had energy for us. 
(END VIDEO CLIP) 
KAGAN: And joining us from our Boston bureau to talk about the documentary is 
"Frontline" correspondent and producer Lowell Bergman. Lowell, good morning, 
good to see you. 
LOWELL BERGMAN, PRODUCER, "FRONTLINE": Good morning to you. 
KAGAN: To refresh our... 
BERGMAN: Good to see the lights on. 
KAGAN: Good to see we're working today. That's positive. Sometimes you just 
don't know. Our viewers might be more familiar with you. Your the guy who, in 
the movie "The Insider," Al Pacino portrayed as the producer who took on the 
tobacco industry. 
BERGMAN: I'm not Al Pacino. 
KAGAN: You're not Al Pacino, but accomplished in your own right, and as a 
reporter, a journalist who really likes to take on tough, difficult topics, 
like the tobacco industry, like the drug wars, a previous "Frontline" 
documentary, and now, the power companies. How does that compare to previous 
topics? 
BERGMAN: Well, this is really a subject that touches everyone's lives. As you 
know, when you wake up in the morning and you turn on your radio, you expect 
the electricity to be on or your television to go on. What happens when that 
doesn't happen? And why is that happening now in place like California, and 
also why are your bills going up. You're pretty lucky, actually, where you 
are. Your electricity bills are probably pretty stable. That's because you 
haven't deregulated yet. That is, they haven't tried to restructure the 
marketplace. KAGAN: You haven't see our natural gas bills. Our natural gas 
bills here in Atlanta have gone -- we've had taste of that. 
BERGMAN: Well, that's part of the documentary. Natural gas has usually been 
set up as the example, the deregulation example for the rest of the country, 
and the reason why we started to deregulate electricity. Now, with the great 
rise in cost nationally, people are beginning to scratch their heads, and I 
think that's one of the reasons we decided to do the show is because we never 
really had what we would call an intense national discussion of why were we 
doing this to these essential commodities that we all need. 
KAGAN: Well, let's talk about the deregulation. Story after story in 
California, you have people blaming deregulation. But what really is it, and 
what was it supposed to do and what went wrong? 
BERGMAN: Well, first of all, California went first, in 1996 with a plan that 
now everyone is disowning, but everyone voted in favor of unanimously at the 
time. Every political spectrum joined in wanting to change the nature of the 
marketplace. So, in many ways, California is a learning experience for the 
rest of the country, probably in some of the rules that don't make sense or 
in the end, didn't make sense. 
KAGAN: Why did it seem like a good idea back then? I mean, if all the people 
were in favor of it, then it must have looked good to a lot of people. 
BERGMAN: Well, because number one, the utilities were never our favorite 
monopoly in any of our communities. You know about Homer Simpson and "Erin 
Brockovich" and the image isn't exactly of companies that warm our heart. 
That combined with large users of electricity, big industry wanted to change 
the system so they would have an opportunity to go out in the open 
marketplace and buy power cheaper or so they thought. 
KAGAN: You mention, of course, that this is a story that touches all of us, 
anybody who electricity on in their home, unless it's like the folks that we 
featured before you who have their own power source. But how do you take 
that, Lowell, and how do you make it a good television story besides a bunch 
of pictures of power plants? 
BERGMAN: Well, what we found, what we discovered is that the deregulation of 
the industry has created a new kind of energy company, and the best example 
of that is Enron, based in Houston, Texas, and they were nice enough and 
cooperative in every way. So, they let us in to see what it is they do do. 
What is this new new energy business. 
For instance, Enron is the largest Internet business in the world. It has 
Enron Online, and on that site, it buys and sells tens of billions of dollars 
worth of electricity, gas and oil every year. This is a kind of marketplace 
that never existed before. So, one of the functions of a documentary is to 
try to open not only our eyes, the people doing it, the reporters, but also 
the public's eyes as to what has gone on. This is something that is 
well-known inside business communities nationally, but it's not well-known 
among most of us. So, that's one area. Another area that we get into is 
examining whether or not there was real manipulation by the energy generators 
in California, and nationally as well as the gas companies. 
KAGAN: Well, we will look for it. We will look for it tomorrow, sorry. The 
power on our interview here is running out. We ran out of time. Lowell 
Bergman, good luck with it. Most viewers will find it on their PBS station 
tomorrow night, correct? 
BERGMAN: Thank you. It will be -- check your local listings. 
KAGAN: Check your local listings, as they say, and check the electricity bill 
as well. Lowell Bergman, thanks for joining. 
BERGMAN: Thank you. 

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



Bush Aide, Ethics Agency Differ Over Stock Sale Delay (Update1)
2001-06-04 18:45 (New York)

Bush Aide, Ethics Agency Differ Over Stock Sale Delay (Update1)

     (Adds Womack comments in fifth-10th paragraphs.)

     Washington, June 4 (Bloomberg) -- The White House and the
federal Office of Government Ethics differed over what was
delaying the sale of stock by President George W. Bush's top
political strategist Karl Rove.
     Rove said he has been waiting months for ethics office
approval of a document that would let him avoid capital-gains
taxes on his sale of stock in more than two dozen companies that
could present a conflict of interest.
     An ethics office spokesman said today Rove hasn't submitted a
request for such a document, called a ``certificate of
divestiture,'' which normally takes only a few days to process.
     Rove's financial disclosure form, which was released by the
White House last week, does contain a notation, dated May 18 and
initialed by an ethics officer, that states ``all individual stock
holdings to be sold.''
     Rove said he's been waiting for approval from the ethics
office to sell all of his stock holdings, White House spokeswoman
Anne Womack said.
     ``Mr. Rove was willing to divest himself in December, but was
advised by the White House counsel's office he should not do so
until they reviewed his holdings and determined the best course of
action to avoid any conflict of interest,'' White House
spokeswoman Anne Womack said.

                     Skipping Some Discussions

     In the meantime, Rove said he's been skipping discussions
that could have a direct impact on his stocks, Womack said. ``He
told me, `There have been conversations I just walked away
from,''' Womack said.
     The Wall Street Journal reported this morning that Rove said
he'd been waiting for several months for ethics office approval to
sell his stock holdings and put the proceeds into a diversified
account. The ethics office said it's the responsibility of the
government official to request a certificate of divestiture.
     Womack said a draft of Rove's divestiture paperwork was sent
in ``mid to late April'' to the Office of Government Ethics, and
Rove has yet to receive guidance back from the agency.
     Rove is ``trying to get this done in a timely way,'' Womack
said. ``This is really a paperwork issue at this point.''
     The disclosure form shows Rove owning assets valued at from
$2.3 million to $5.6 million, based on the broad ranges of values
used for such forms. Many of the companies do business with the
U.S. government or could be affected by policies emanating from
the White House.

                         Biggest Holdings

     Rove owns between $100,000 and $250,000 of stock in Enron
Corp., the biggest energy trader and owner of U.S. interstate
pipelines, according to the disclosure form. He has similar
amounts of stock in Pfizer Inc., General Electric Co., Boeing Co.,
Cisco Systems Inc., American Express Co., Sallie Mae, Intel Corp.,
Wells Fargo & Co., and Johnson & Johnson. He also reported smaller
holdings in a dozen other companies and in 10 funds.
     Since taking office, Rove has seen the value of many of his
stocks decline. Enron has fallen about 23 percent since Bush took
office in January; American Express has dropped 8 percent; Cisco
has slid about 51 percent; and Intel has dipped 15 percent.
     Boeing shares have climbed about 19 percent since January,
while Johnson & Johnson has risen 6 percent.




Marathon Gets Enron's 20% Stake in Saudi Gas Project (Update1)
2001-06-04 18:13 (New York)

Marathon Gets Enron's 20% Stake in Saudi Gas Project (Update1)

     (Adds Exxon Mobil's, Occidental's shares of the project in
second paragraph.)

     Houston, June 4 (Bloomberg) -- USX-Marathon Group, the fourth-
biggest U.S. oil company, got Enron Corp.'s 20 percent stake in a
project that's part of a $25 billion natural-gas venture in Saudi
Arabia.
     Marathon will join project leader Exxon Mobil Corp. and
Occidental Petroleum Corp. in the ``Red Sea Consortium,'' Marathon
spokesman Roger Holliday said. Exxon Mobil will have a 60 percent
stake, and Occidental will hold 20 percent, Exxon Mobil
spokeswoman Suzanne McCarron said.
     The three companies joined the Royal Dutch/Shell Group, BP
Plc, TotalFinaElf SA, Conoco Inc. and Phillips Petroleum Co. in a
signing ceremony in Saudi Arabia Sunday for three projects, the
first gas-exploration business offered to international companies
in 20 years. The gas business may give the companies a lead over
rivals if Saudi Arabia lets international companies develop crude-
oil reserves.
     Details are still being negotiated. The companies are
expected to spend $17 billion on the biggest project and about $4
billion on another. The size of the Red Sea project still is
unclear, Holliday said.
     ``My understanding is there's exploration involved, and the
final scope of the project will be determined later,'' he said.
     Enron said Friday it had pulled out of the venture, though it
may provide services under a separate contract with Occidental. A
company spokesman declined to say why Enron backed out. Enron has
moved away from large infrastructure projects to focus on trading
electricity, gas and other commodities.
     Marathon and Enron, the biggest energy trader and a pipeline
company, are based in Houston. Exxon Mobil, the world's biggest
publicly traded oil company, is based in Irving, Texas.
Occidental, a U.S. oil and gas producer, is based in Los Angeles.
     Saudi Arabia wants to convert its oil-powered utilities to
run on cheaper natural gas. The country has had budget deficits
for most of the past two decades and needs international
investments to proceed with the projects.
     Shares of Marathon rose 57 cents to $32.72. Enron rose $1.50
to $54.54.