MIDDLE EAST, AFRICA & ASIA-PACIFIC - US agency in threat on Indian loan guarantees.
Financial Times, 09/10/01
Manager's Journal: The Welch Legacy: Creative Destruction
The Wall Street Journal, 09/10/01
RWE Unit Wants Top Spot Among Europe's Energy Traders
Dow Jones International News, 09/10/01
INTERVIEW:Oman Delays LNG Deliveries To India Dabhol Pwr
Dow Jones Energy Service, 09/10/01
UK: Second phase of LME screen trade starts steady.
Reuters English News Service, 09/10/01
INDIA: US Exim may encash Enron India unit guarantee-paper.
Reuters English News Service, 09/10/01
INDIA PRESS: Dabhol Proj Cost May Rise $708M Due To Delay
Dow Jones International News, 09/10/01
Dabhol impasse to cost MSEB Rs 15,000cr
The Economic Times, 09/10/01

Vajpayee Asks Indian Govt to Resolve Enron Power Plant Dispute
Bloomberg, 09/10/01

MIDDLE EAST, AFRICA & ASIA-PACIFIC - US agency in threat on Indian loan guarantees.
By KHOZEM MERCHANT.

09/10/2001
Financial Times
(c) 2001 Financial Times Limited . All Rights Reserved

The US Export-Import Bank, one of the biggest lenders to the controversial Enron power project in Bombay, has indicated it may call in loan guarantees from Indian banks if a legal dispute over the plant is not resolved.
The Washington-based export credit agency has advanced $298.2m ( #205.6m) to Enron's Indian arm, Dabhol Power Company (DPC), which is owed $45m in unpaid bills by its sole local customer, the Maharashtra State Electricity Board (MSEB). The two sides are locked in a messy legal dispute over the choice of an arbitration authority.
Enron's relations with MSEB have collapsed since the utility rescinded its contract earlier this year and refused to draw down power from the 2,184mw plant in Maharashtra, western India.
The Houston-based company says it wants to quit India and is demanding full compensation of the $1.1bn it has invested in the plant, whose $2.9bn total cost makes it India's biggest single foreign direct investment. About a third of the $2bn in debt raised by DPC to finance the project was from foreign lenders, including Bank of America, Citibank, ABN Amro and Overseas Private Investment Corp of the US. Indian banks' exposure is $1.4bn, including guarantees of foreign banks' loans.
US Export-Import Bank's threat to invoke loan guarantees by a syndicate of five Indian banks, including Industrial Development Bank of India, the country's biggest long-term lender, is contained in a petition to a Bombay court. The US bank wants to be allowed to argue in court on behalf of DPC, which is contesting MSEB's choice of a local arbitrator to resolve the payments dispute.
MSEB says the relatively untested Maharashtra Electricity Regulatory Commission (Merc) is the appropriate body to arbitrate. But DPC says arbitration must take place in the neutral location assigned in their contract.
Last month, India's Supreme Court upheld DPC's appeal against the Bombay high court, which had earlier ruled that Merc must decide for itself on whether it is the correct body to arbitrate.
The new judgment by the Bombay high court is expected soon.
The US bank's move, which follows a similar initiative in July by 11 foreign banks with loans of $440m to DPC, is designed to persuade the Bombay court to uphold the arbitration procedure laid out in DPC's contract with MSEB.
In its petition, US Export-Import Bank, which has loans and guarantees totalling $1.2bn in India, says a safe and internationally recognised arbitration process was a key factor in its decision to advance the loan to DPC.
The dispute over arbitration is one element of a cooling relationship between Enron and India. Matters reached a diplomatically embarrassing point last month after Ken Lay, chairman of Enron, spoke of sanctions against India if the US company was not fully compensated. For regional reports, www.ft.com/asiapacific.
(c) Copyright Financial Times Ltd. All rights reserved.
http://www.ft.com.

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

Manager's Journal: The Welch Legacy: Creative Destruction
By Richard Foster

09/10/2001
The Wall Street Journal
A18
(Copyright (c) 2001, Dow Jones & Company, Inc.)

Whole institutions may one day be built just to preserve and dissect the leadership lessons of Jack Welch, who stepped down as chairman and CEO of General Electric on Friday. But the key to understanding Mr. Welch's astonishing legacy of shareholder return -- a 23% compounded annual growth rate over his 20-year tenure, versus 15% for the S&P 500 -- lies in what Joseph Schumpeter, the great Austrian-American economist of the 1930s and '40s, called "the gales of creative destruction." In the latter part of his helmsmanship, Mr. Welch updated this mantra for a while by urging the managers of his business units to "destroyyourbusiness.com," embracing the emerging capabilities of the Internet.
What Mr. Welch recognized is that destroying one's own businesses -- or knowing when to let go of them and move in a different direction -- is a far surer way to generate value and outperform the market than to buckle down and try to protect what you've built, regardless of how grand. Despite all the deserving accolades bestowed on Mr. Welch, and GE's willingness to share its philosophies and methods with others, GE's long-term performance remains a rare exception in corporate America.
For the past several decades we have celebrated the big corporate survivors, praising their excellence and their longevity. The general assumption is that these are the bedrock companies of the American economy, attracting legions of patient investors with the expectation of being rewarded richly at the end of a lifetime. If only this were true.
Of the 500 companies making up the S&P 500 when it was introduced in 1957, only 74 remained on the list through 1997. And of these 74, only 12 outperformed the S&P 500 index itself over the 1957-1998 period. Of these 12, only two were not part of industries which themselves outperformed the index: General Electric and Johnson & Johnson. If today's S&P 500 were made up only of those companies that were on the list when it was formed, the overall performance of the S&P would have been 20% less per year than it actually has been. Investors patiently investing in corporate survivors will substantially lag investors who merely invest in market index funds.
Why is this? Capital markets, and the indices that reflect them, encourage the creation of corporations, support their efficient operations (so long as they remain competitive), and then rapidly -- and remorselessly -- remove them when they lose their ability to perform. Corporations that assume continuity and longevity in their businesses are unable to change at the pace and scale of the market. Superior performance, at least for a time, usually appears among relatively new entrants in the economy -- companies like Intel, Amgen and Cisco. Mr. Welch's brilliance was in never losing sight of the close parallels that should exist between corporations and capital markets in assessing investments, and in ensuring that GE changed at the pace of the market. As he wrote in GE's 2000 annual report: "We've long believed that when the rate of change inside an institution becomes slower than the rate of change outside, the end is in sight. The only question is when."
How can corporations change internally at the same rate as the external markets? Corporations are built on the assumption of continuity; hence their focus is on operations. Capital markets are built on the assumption of discontinuity; their focus is on creation and destruction. This is the central contradiction of the life of a corporation: It cannot succeed without excellent operations, but it will fail if it focuses primarily on operations. Corporations are afflicted with the survivor's curse: Most are unable to earn above-average or even average shareholder returns over the long term. Their control processes -- the very processes that help them survive for the long haul -- deaden them to the need for change. Mr. Welch's mastery of creative destruction was rooted in his ability to decentralize operating responsibilities and make creative destruction the responsibility of senior management. This is a very difficult balancing act.
Within four years of taking over as CEO at GE, Mr. Welch divested 117 business units -- from mines to Light N'Easy irons -- totaling one-fifth of GE's 1981 $21 billion asset base. He was determined to shake up GE's staid, outmoded view of itself by creating, operating and ultimately selling divisions. Mr. Welch's "new" GE would be a high-tech provider of large-ticket products and essential services, ranging from mutual funds to jet engines, credit card processing, medical imaging, and network television programming. By aggressively moving to sell prime symbols of the "old" GE, Mr. Welch advanced his case by years, if not decades. He demonstrated early in his tenure that "nothing is sacred," "change will be accepted as the rule, rather than the exception," and "paradox is a way of life."
Even apparently big setbacks, like the ruling by European regulators against GE's bid for Honeywell, seem like an acceptable blip in the company's progress. As Mr. Welch told The Wall Street Journal in a 1999 interview, every acquisition GE makes has "a perfect plan, but we know 20 or 30 percent will blow up in our face. A small company can only afford to make one or two bets or they go out of business. But we can afford to make lots more mistakes, and, in fact, we have to throw more things at the walls. The big companies that get into trouble are those that try to manage their size instead of experiment with it." This is similar to the private equity model of create, operate, trade.
Other companies, including Enron and Johnson & Johnson, have followed the create, operate, trade mantra with positive results. In the 1920s and 1930s, the turnover rate in the old S&P 90 Index was about 1.5%, which meant that, on average, a company on the list could expect to remain on it for more than 65 years. Because of the accelerating forces of creative destruction, led by the mergers and acquisitions boom begun in the 1980s, McKinsey & Company estimates that by the end of the year 2020 the average lifetime of a corporation on the S&P will have been shortened to about 10 years. Will GE still be among the "survivors," and continue to be a rare example of long-term market performance? No one really knows, but the challenge will be more difficult than Mr. Welch faced if long-term historic trends of market change continue.
When Mr. Welch took over at GE in 1981, much of GE's management philosophy was based on the idea of defend first, attack if you must. Mr. Welch's greatest contribution to GE employees and shareholders has been to turn this rule on its head, into attack first, defend when necessary. Under Mr. Welch, GE found a way to effectively integrate the functions of creation, operation, and trading close to the pace and scale of the market. While mirroring GE's success will not be easy, Mr. Welch's legacy shows that accelerating change can be accomplished in public companies, and that the capital markets will reward the companies that can do it.
---
Mr. Foster is a director at McKinsey & Company, and co-author of "Creative Destruction: Why Companies That Are Built to Last Underperform the Market -- and How to Successfully Transform Them" (Doubleday, 2001).

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

RWE Unit Wants Top Spot Among Europe's Energy Traders
By Stephan Kueffner
Of DOW JONES NEWSWIRES

09/10/2001
Dow Jones International News
(Copyright (c) 2001, Dow Jones & Company, Inc.)

ESSEN, Germany -(Dow Jones)- RWE Trading GmbH, the energy trading unit of RWE AG (G.RWE), wants to be the top energy trader in Europe, its chairman told Dow Jones Newswires in an interview.
"We want to become Europe's leading energy trading house," said Hans-Dieter Erfkemper. Currently, the division is one of the top three along with Enron Corp. (ENE) and Electricite de France (F.EDF). It trades in power, gas, coal and oil.
After beginning operations in 1999, RWE Trading last year sold 300 terawatt hours, contributing close EUR1.6 billion in group sales, and will at least equal that sum this year, adjusted for the company's merger-induced abbreviated fiscal year, Erfkemper said. RWE will report detailed annual figures Sept. 26. It trades in the U.K., Germany, and Scandinavian markets and plans to start trading in the U.S. in early 2002.
Though the European market is still fragmented along national lines, Erfkemper expects a more unified market to gradually appear parallel to deregulation planned by the European Union.
"I do think the timetable the E.U. has set to liberalize itself will in the broadest sense be kept," Erfkemper said, "though most countries will try to boost national champions as long as possible."
Creating a European power market will also involve substantial investments in infrastructure to ease power congestion at international interconnection points.
Some markets have yet to follow the lead of the U.K., Scandinavia, and Germany in setting up viable energy trading, but trading in physical volumes and derivatives will boom as the market develops, RWE Trading thinks.
"We believe the derivatives business will significantly grow in importance because physical growth in Europe is limited," Erfkemper said. RWE Trading expects derivatives trading to exceed trades in physical volumes to 2002 or 2003, and Erfkemper said he expects "the real breakthrough for the classic, financial-markets-driven business around 2005 at the latest," together with deregulation and maturing of a European market.
In 1999, European energy trading amounted to 2.5 thousand terawatt hours, with only a very small part being derivatives.
Energy traders have a strong position to compete with traditional financial institutions in the energy trading market because they know how weather and other factors move power demand, and they have long-term historical data on which they can base their estimates.
"I suspect it's more difficult for banks to gain the 100-year experience of RWE than for an energy group to buy financial expertise," Erfkemper said.
In the U.K., RWE Trading has built up a domestic power trading team and is currently setting up the legal and credit documentation necessary to get into the market. It hopes to enter the U.K. power market in October or November at the latest.
In Germany, where two energy exchanges - the Leipzig Power Exchange and Deutsche Boerse AG's (G.DBO) European Energy Exchange - have initiated trading, Erfkemper said he hopes both exchanges will find closer ties now that the market has matured.
RWE Trading believes it will continue to use the Open Link Finance trading system in the foreseeable future.
Besides providing RWE with revenue from selling energy to third parties, the group's trading activities allow it to fine-tune production of its own within the group.
RWE Trading has played a key roll in RWE's cost-management program, with plants expected to at least match wholesale prices noted by the trading unit, Erfkemper said.
At present, RWE buys roughly half its power on the market, though the precise level depends closely on demand, the type of power, and a multiplicity of other factors, said RWE Trading Managing Director Stefan Judisch.
While German power prices fell sharply since deregulation, they've been recovering strongly this year - an indicator overcapacity is being eliminated, though German power producers still have plants online that are scheduled to be closed.
"If you just add installed megawatt capacity you're making a mistake" in trying to gauge whether there's overcapacity in the market, Erfkemper said.
RWE's power prices are currently hedged into 2003.
Power demand on the continent will gradually follow the U.K.'s lead and seek more peak-load power, rather than buying power from the base-load generation facilities that dominate the power plant landscape, Judisch said.
"Structurally, the amount of overcapacity in the market is far less than what people estimate," he added.
The U.K. also has a lead in emissions rights trading, a business RWE Trading will soon become involved via RWE's Thames Water unit, beginning trading Oct. 1.
The outlook for emissions rights trading in Europe is still quite hazy, Judisch said, citing uncertainties involved both in the Kyoto Process on reducing emissions and the slow progress in agreeing on a European Union directive for emissions rights trading in the E.U.
The E.U. Commission hopes emissions rights trading can begin in 2005.
While some companies have dabbled in international emissions trading among themselves in the meantime, Judisch ruled out the possibility RWE Trading would do that.
Regarding weather derivatives, which are still developing in Europe, RWE Trading is drawing on the experience of other participants - particularly in the U.S. - and is working on a business plan for a weather derivatives product of its own.
-By Stephan Kueffner, Dow Jones Newswires; +49 69 29 72 55 00; stephan.kueffner@dowjones.com

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

INTERVIEW:Oman Delays LNG Deliveries To India Dabhol Pwr

09/10/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

Nurul Darni
Of DOW JONES NEWSWIRES

SINGAPORE -(Dow Jones)- Oman is delaying deliveries of its liquefied natural gas to India's Dabhol Power Co., a unit of Enron Corp. (ENE), following a price dispute between Enron and state-owned Maharashtra State Electricity Board, Oman's oil minister said Monday.
Dabhol, which owns a 2,184-megawatt power project in the western Indian state of Maharashtra, has signed 20-year contracts requiring it to buy LNG from Oman and Abu Dhabi effective 2002.
"We have signed a contract with Dabhol sometime in the last two years to supply LNG beginning next year. But unfortunately, with the ongoing problems with Enron, LNG supplies will be delayed," Mohammed Al-Rumhy told Dow Jones Newswires in an interview.
Last week, Enron threatened to pull out of the US$2.9 billion Dabhol project after a row over payments with its sole buyer, MSEB, and the failure of India's federal government to honor its counter-guarantee for the Dabhol project.
"We are concerned, but there is nothing we can do about it," Al-Rumhy said.
"The ongoing problem is affecting delivery of our first cargo in February next year. I don't expect that will happen," Al-Rumhy said, adding that the receiving facility in Dabhol isn't completed to accept its LNG shipment yet.
Al-Rumhy said Oman is currently in talks with Dabhol to rearrange a new schedule on Oman's LNG delivery timing.
"We have not come out with an alternative schedule yet. But we hope to resolve that as soon as possible," Al-Rumhy said.
Al-Rumhy said due to the ongoing dispute with Enron, the project may not be commissioned on time.
Dabhol's phase II is about 95% complete, but that was not without glitches when construction of the project was abandoned in June due to Dabhol Power Co.'s failure to pay contractors.
"However, a lot of money has gone to the project, and I'm sure they'll find a way to complete the project," Al-Rumhy said.
Enron has a 63% stake in Dabhol Power Co. MSEB holds a 15% stake, while U.S. companies General Electric Co. (GE) and Bechtel Group Inc. (X.BTL)) hold 10% each.
"Until the problem with Enron is resolved, it would be difficult for us and Dabhol to come up with a concrete plan about LNG deliveries," Al-Rumhy said.
-By Nurul Darni, Dow Jones Newswires; 65-4154-064; nurul.darni@dowjones.com -0- 10/09/01 11-17G

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

UK: Second phase of LME screen trade starts steady.

09/10/2001
Reuters English News Service
(C) Reuters Limited 2001.

LONDON, Sept 10 (Reuters) - The second, more sophisticated phase of electronic screen trading on the London Metal Exchange (LME) made a slow but steady start on Monday, which traders said partly reflected the overall low level of business this morning. By 0904 GMT, total turnover on the copper , aluminium , and zinc three months contracts was 262 lots. Total turnover on Friday was 945 lots.
But spread business had also been transacted, while some traders were also reporting quote requests having been input into the system.
"There has not been a lot of activity on it so far...but we've got some request-for-quotes out," one trader said.
Others said there appeared to be some initial data teething problems, but the system was more user-friendly than the original version launched earlier in the year.
"I think that maybe some people were unaware that the second release started today. But from what I've seen it is easier to use than anticipated," another trader said.
LME representatives are visting traders' offices, helping with screen configurations and 'short-cuts', so trade could well pick up later, he said.
The LME introduced its automated trading system (ATS), known as Select in February, but this was a basic version, confined to just the cash, three months and cash/three months spread benchmark contracts. There were also restrictions on lot sizes.
However, in today's second release there is no restriction on lot size, and all the LME's contracts are now on the screen which trades from 0730 to 1930 local. It also incorporates a unique request-for-quote function. This allows traders to direct enquiries, such as market size and depth, to as many or as few respondents as required, and whether or not to be anonymous.
The automated trade system (ATS) is not designed to replace open-outcry on the 124-year-old Exchange. Rather, it will complement the current mix of inter-office phone trading and open-outcry.
Select is available to ring dealing members (RDMs) of the exchange and to associate broker clearing members (ABCMs), who have similar status but cannot participate in open outcry.
LME Select, which will cost some 12 million pounds ($17.33 million) over three years, funded from LME resources, is supplied by Swedish technology company OM Gruppen.
The LME's system runs alongside rival platforms, managed by UK-based Spectron Metals and Enron Online, part of Enron Corp of the U.S.
Compared with open-outcry turnovers, screen volumes are comparatively low, although there have been signs in recent weeks that business on Select has been picking up.

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

INDIA: US Exim may encash Enron India unit guarantee-paper.

09/10/2001
Reuters English News Service
(C) Reuters Limited 2001.

BOMBAY, Sept 10 (Reuters) - The U.S. Exim Bank has threatened to encash nearly $300 million in guarantees given by Indian banks and financial institutions on loans to Enron's troubled Indian unit, a business daily reported on Monday.
The report in the Economic Times quoted local news agencies as saying the bank had lent $298.2 million to an Enron subsidiary, Dabhol Power Company (DPC), to build a $2.9 billion, 2,184 MW power project on India's western coast.
Of this, Enron's Indian unit owes $221.7 million of the principal to the U.S. Exim bank, the report said.
Enron has been locked in a dispute with the Maharastra State Electricity Board (MSEB), which had contracted to buy power from the Enron project.
The project's first phase of 740 MW is up and running, but work on the second phase, which is 97 percent complete, was halted in June after the (MSEB) refused to draw any more power, claiming the plant's power was too expensive.
The utility has several unpaid bills and has refused to buy power from the second phase of the project. The lenders then refused to disburse the final portion of their loans.
This forced Enron to announce its decision to exit the project because of the row and the utility's delay in payments. Enron claims the utility has not paid bills worth $185 million.
Global lenders like Exim Bank are now afraid that Dabhol may not be able to repay its loans because of the controversy and the stoppage of purchases by its sole customer.
"We may require to draw upon the guarantees given to us by the Indian financial institutions...if DPC finds itself in a position, where it lacks the financial resources with which it could service or repay the loan advanced to it by us," the report in The Economic Times said.
Leading lenders like the Industrial Development Bank of India (IDBI) , the Industrial Finance Corporation , ICICI Ltd , State Bank of India and Canara Bank had given guarantees to U.S. Exim for the loan.
Guarantees are common in large infrastructure projects as a source of comfort for foreign lenders.
Exim Bank officials were not immediately available for comment.
PRESSURE ON GOVERNMENT
The bank's move is bad news for the Indian government and its banks and financial institutions, led by the IDBI, the country's largest term lender.
The lenders, including IDBI, are reeling under falling profits and mounting bad debts and would be hard-pressed to cough up the amount, analysts said.
Exim's threat will increase pressure on the federal government to solve the spat between the U.S. energy giant and the utility, which some analysts say has hurt India's image among foreign investors.
The Economic Times report said the U.S. Exim bank made the threat in a submission before the Bombay high court. The court is hearing a petition by Dabhol, which wants its dispute to be settled through arbitration in London.
Exim Bank's submission before the Bombay high court is part of a petition by Dabhol seeking to overturn a stay on arbitration proceedings granted by a local regulator in June.
The initial contract between DPC and MSEB in 1995 had provided for all disputes to be settled by a panel of arbitrators in London.
But MSEB opposed this in May, saying that a local regulator, the Maharashtra Electricity Regulatory Commission (MERC), should rule on the issue and managed to secure a stay from the regulator on the arbitration.
DPC is seeking to overturn this and foreign lenders, including Exim Bank, are backing the company's move.
"The willingness of the courts of a country where the project is situated to enforce arbitration agreements providing for international arbitration are important criteria for the bank when assessing the risk of lending within a particular country, and, when deciding whether it will or not advance any loan," the Economic Times report said.

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

INDIA PRESS: Dabhol Proj Cost May Rise $708M Due To Delay

09/10/2001
Dow Jones International News
(Copyright (c) 2001, Dow Jones & Company, Inc.)

NEW DELHI -(Dow Jones)- A delay in the completion of Dabhol Power Co.'s 1,444-megawatt phase II is estimated to increase the project's cost by $708 million to $2.576 billion from $1.868 billion, reports the Economic Times, quoting DPC's estimates.
Dabhol is a 2,184 megawatt power project in the western Indian state of Maharashtra. U.S. energy major Enron Corp. (ENE) holds a controlling 65% stake in DPC.
Dabhol phase II is currently about 95% complete. Its construction was abandoned mid-June because of DPC's inability to pay the contractors.
Enron has threatened to pull out of the Dabhol project following payment disputes with its sole buyer, the Maharashtra State Electricity Board and the failure of India's federal government to honor its counter-guarantee for Dabhol project.
Web site: http://www.economictimes.com

-By Himendra Kumar, Dow Jones Newswires; 91-11-461-9426; himendra.kumar@dowjones.com

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

Dabhol impasse to cost MSEB Rs 15,000cr
Our Bureau

09/10/2001
The Economic Times
Copyright (C) 2001 The Economic Times; Source: World Reporter (TM)

THE STOPPAGE of work and the current impasse at the Dabhol power project is estimated to increase the project cost by 39 per cent and impose liabilities to the tune of Rs 15,000 crore on the Maharashtra State Electricity Board and the state government.
While the Centre will have to bear a liability of Rs 860 crore if the talks fail, financial institutions have expressed apprehensions that they may not be in a position to take any further exposure in the power sector.
According to DPCs estimates which have been included in the committee report submitted to the Maharshtra government, the project cost for phase -II would increase from $1868 million to $2576 million.
The total overrun including suspension costs aggregate to $708 million. Sources said if one excludes the project completion support of $214 million from sponsors, the balance overrun which would have to be financed by lenders would aggregate to $494 million.
The project is estimated to take at least 18 months to be completed from the zero date, sources said.
As far as the FIs are concerned, this delay and imbroglio will cost them heavily and could even lead to assets turning into non-performing in their accounts.
The total exposure of the Indian lenders stands at $1.2 billion. It is further apprehended that if the export credit agencies decide to evoke their guarantees which have been covered by the FIs, it would straightaway lead to a cash outgo of Rs 3,507 crore.
This is also expected to impact inflow of fresh FDI in the power sector. Although government sources and power ministry officials deny any such development, the Enron case has already began having its impact on future investments.
So much so, that even domestic chapters of commerce and industry have now offered to play a role in mediating to find an early solution. The Prime mininisters message to work towards an acceptable solution at the earliest reflects the mood and the urgency behind the problem, sources said.
A committee headed by IDBI met the Union power and finance secretaries last week to submit a roadmap to resolve the impasse. The committee has suggested several options and means to find a suitable solution. While some of them are unlikely to be accepted, industry sources said that the report can form the basis for further discussions.

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

Vajpayee Asks Indian Govt to Resolve Enron Power Plant Dispute
2001-09-10 04:25 (New York)

Vajpayee Asks Indian Govt to Resolve Enron Power Plant Dispute

     Singapore, Sept. 10 (Bloomberg) -- India's Prime Minister
Atal Behari Vajpayee has directed his government to resolve a
dispute over payments for electricity by the state of Maharashtra
from a $3 billion power plant owned by a unit of Enron Corp., the
biggest energy trader, said Petroleum Minister Ram Naik.

     ``That one issue has been pending for so long, and he wants
to sort it out,'' Naik said in a Bloomberg television interview.
He didn't say how the dispute would be resolved.

     Vajpayee wants the government, financial institutions and
other partners in the Dabhol Power Co. project to solve the
dispute, which arose when the state defaulted on $64 million of
payments, saying the plant charged too much.

     The dispute may deter other investors from channeling their
money to India at a time when the economy is faltering. India's
economy expanded 3.8 percent in the first quarter, its slowest
pace in almost three years.

     Enron stopped construction of the second phase of the power
plant in June after the Maharashtra state stopped buying power a
month earlier.

     ``Enron should be treated as an exception rather than the
rule,'' Naik said. ``Thousands of companies from major countries
like the U.S. and Japan or the U.K. or France, have invested over
the years in India.''

     Houston-based Enron owns 65 percent of Dabhol Power.


I've dragged you to two country concerts, so you can pick this one.  Either
is fine with me.  I promise.  Mom and I did have a good weekend.  We were
laughing last night b/c we really didn't do anything.  We just sat around and
talked and watched movies all weekend.  She said to tell you she's sorry she
ruined your weekend.  I told her you didn't mind that she was here.

What'd you end up doing last night?

Talk to ya later,
Robin


Bob Badeer changed the time zone in one of these deals - apparently that's
what was throwing off the MW totals. So 458406 and 458405 should match now.
Please let me know if there is anything else.

Thanks,
Kate

Kerri Thompson@ENRON
11/15/2000 03:07 PM
To: Kate Symes/PDX/ECT@ECT
cc: Carla Hoffman/PDX/ECT@ECT

Subject:

458406

i don't think this deal is entered correctly, the hours are not matching the
other deals.  can you pls check on this deal

thanks


FYI

Vince
---------------------- Forwarded by Vince J Kaminski/HOU/ECT on 08/28/2000
08:00 AM ---------------------------

	Enron Technology

	From:  Ashley Baxter @ ENRON                           08/26/2000 10:54 AM

To: vkamins@enron.com, John Pavetto/Corp/Enron@Enron, Paulo
Issler/HOU/ECT@ECT, Radu Tutos/Enron Communications@Enron Communications,
Keith Couch/Corp/Enron@Enron, Michael Guadarrama/HOU/ECT@ECT, Randy
Matson/Corp/Enron@ENRON, Steve Nat/Corp/Enron@ENRON, Christopher
Funk/HOU/ECT@ECT, Clarissa Cooper/NA/Enron@Enron, Anthony
Rimoldi/Corp/Enron@Enron, Denise Rancour/Corp/Enron@Enron, Kevin
Lee/Corp/Enron@Enron, Osman Sezgen/HOU/EES@EES, Bryan Garrett/Enron
Communications@Enron Communications, Tim Belden/HOU/ECT@ECT
cc: Shelly Jones/HOU/ECT@ECT, Celeste Roberts/HOU/ECT@ECT, Donna
Jones/HOU/ECT@ECT
Subject: Cal Berkely Team Meeting - UPDATE

Please note that the Cal Berkeley Team Meeting location has been moved.

Tuesday, August 29th
2:00 p.m.
49C4

See you there!
Thank you,
Ashley


Sara:

Any chance you are available at 1:30pm on Wednesday for a call regarding the
Enron/Corrugated Services ISDA?  If that time will not work for you, please
suggest another time tomorrow afternoon that would.

Also, you will be receiving on Thursday morning a copy of some of the more
relevant documentation relating to the June 2000 drop down of the Corrugated
Services, Inc. operating assets and liabilities (including the original
Enron/Corrugated Services, Inc. ISDA) into a newly formed limited
partnership known as Corrugated Services, L.P.  In connection with that
transaction, Corrugated Services, Inc. changed its name to CSI Holdings,
Inc.  CSI Holdings, Inc. also formed at that time and now owns 100% of CSI
GP, Inc., which entity serves as the general partner of Corrugated Services,
L.P.  All of this was done to create a more franchise tax efficient
operating and ownership structure.

Based on the foregoing, we believe that it will be necessary to redocument
the original agreement either through an amendment thereto or the
cancellation thereof and the creation of a new LP/Enron agreement.

We plan on discussing the foregoing during our call tomorrow afternoon.

Thanks.
__________________________
Neel Lemon
Baker Botts LLP
2001 Ross Avenue
Suite 700
Dallas, Texas 75201
214.953.6954 - office
214.661.4954 - fax
469.323.6120 - NEW MOBILE
214.361.6717 - home
neel.lemon@bakerbotts.com - email

The information contained in this email is confidential and may be subject
to the attorney-client privilege.  As a result, any unauthorized use or
transmission is prohibited.  If you are not the intended addressee, please
delete this email and notify the sender.


Reagan C. Rorschach
Enron North America
1400 Smith Street
Houston, Texas 77002
713.345.3363

 -----Original Message-----
From:  Rorschach, Reagan
Sent: Thursday, May 17, 2001 11:04 AM
To: Kroll, Heather
Subject: MDEA Docs

Reagan C. Rorschach
Enron North America
1400 Smith Street
Houston, Texas 77002
713.345.3363


In regards to your E-mail, I have recently been informed by Nicole that she
will be leaving Enron effective April 30.  This is unfortunate because she
has been a very valuable member of our team over the last few years and has
been instrumental in developing the Eastern Rockies trading business and
providing our customers with excellent service.  Nicole is not leaving to go
to a competitor, but is going to spend more time with her family.  Given this
fact, you probably want to speed up the transition.

Call me and we can discuss.

Mark

	Jay Reitmeyer@ECT
	03/16/2001 09:04 AM

		 To: Paul T Lucci/NA/Enron@Enron, Mark Whitt/NA/Enron@Enron, Nicole
Cortez/NA/Enron@Enron, Theresa Staab/Corp/Enron@ENRON, Mike
Grigsby/HOU/ECT@ECT, Phillip K Allen/HOU/ECT@ECT
		 cc: Susan M Scott/HOU/ECT@ECT
		 Subject: Denver trading

I would like to welcome Susan Scott to the West Desk and specifically to the
Eastern Rockies trading region.  The plan is for Susan to work with me in
moving the day trading activities from the Denver office to Houston.  Her
specific goals will be to take over activities performed by Nicole and
Theresa while generating EOL products with me and in my absence.

Susan is currently learning how to use EOL and Sitara.  She is also working
on understanding the grid and the relationship between all the different
trading points from Opal to the mid-continent.

My plan is to have Susan go to the Denver office during May bid-week (April
22 - April 24).  I want her to be sitting with Nicole and Theresa during
bid-week to see and learn everything they do during that time.  I will
probably want Nicole and Theresa to come to Houston one more time to sit with
us and the logistics team, maybe in early May.  Then, Susan and I will both
go to Denver in late May or early June to meet industry people and to
complete the transfer of operations to the Houston office.

We can finalize these plans early next week and make all the corresponding
reservations.

Thank you,

Jay


An All Faculty Meeting will be held:

Wednesday, October 17
9:30 a.m. to 10:30 a.m.
Room 124

An agenda is attached. A hard copy of the agenda and minutes of the
September meeting have been placed in your mail box.

Patsy Barker
Executive Assistant to the Dean
Jones Graduate School of Management
Rice University
6100 Main Street, MS-531
Houston, Texas 77005
Tel:  713.348.4838
Fax: 713.348.5110
barker@rice.edu

 - AFMtg10-17-01.doc


Sally and Ted

I have attached both our Project Objectives package and the Remote Office
Questionnaire that we plan to
complete while at the various offices.  Please review at your convenience and
let us know your comments.

Thank you and have a good weekend

Regards
Kate Agnew


Occasionally, when I have a question, I call my little EES buddies to get a
better understanding of a specific LDC.  I don't mention CES and I assume
that's ok.

	From:  Colleen Sullivan                           03/08/2000 08:22 AM

To: Chris Germany/HOU/ECT@ECT, Dick Jenkins/HOU/ECT@ECT, Scott
Neal/HOU/ECT@ECT, Robin Barbe/HOU/ECT@ECT, Hunter S Shively/HOU/ECT@ECT
cc:
Subject: CES Retail Energy Sale

This is just a reminder that there is a confidentiality agreement between ENA
and CES regarding the retail business that prohibits ENA wholesale from
discussing any aspect of the CES Retail business with EES.  If you receive
any calls from EES people about the CES retail business, please inform them
of this prohibition on discussions. If we receive consent from CEG/Nisource
at some point in time, I will let you know.  Thank you.

---------------------- Forwarded by Colleen Sullivan/HOU/ECT on 03/08/2000
08:18 AM ---------------------------

Patrick Conner
03/07/2000 02:46 PM
To: Ed McMichael/HOU/ECT@ECT, Colleen Sullivan/HOU/ECT@ECT, Jeffrey T
Hodge/HOU/ECT@ECT
cc:
Subject: CES Retail Energy Sale

I have confirmed after talking with Jeff Hodge that ENA and EES cannot
discuss anything regarding the CES retail business.  Both the CA and the
Retail Agreement have sections that explicity mention that  ENA has to keep
information confidential.   I talked with Jeff Golden, who is working on the
EES side and mentioned that there can be no discussions between EES and ENA
regarding the CES Retail business without first gaining the written consent
of Nisource/CEG.

Jeff - If I have misstated anything, please let me know.

Patrick


Just spoke with Colette, she confirmed that the list Lance sent us was in fact inaccurate. In fact we had a target of 74 in the C category (or 70%). As such Colette agreed we were done.

Excellent.

David
 -----Original Message-----
From: 	Oxley, David
Sent:	Tuesday, January 29, 2002 5:46 PM
To:	Whalley, Greg; Lavorato, John; Kitchen, Louise
Cc:	Fitzpatrick, Amy; Slone, Jeanie; Davies, Neil; Cash, Michelle
Subject:	NETCo HR - Update Tuesday 6pm

Overall Stats

650	Headcount Budget
688	Updated offers made (includes 9 new offers requested yesterday and today)
584	Acceptances as of now.
52	Outstanding
42	Declines (Mainly commercial plus Weather)

Deal contingency update:

B List
12 of 12		Target was 80% or 10.

C List
79 of 105 (this includes 5 or 6 people who are waiting final docs but are done verbally but not Llodra or Lagrasta who are still "open")
Target was 84.

I have meeting with Colette Dow to discuss C list and make sure she is OK with some of the names we have switched out. Presuming she agrees we will be done on this condition.

David


sounds like some are selling at 44's, now $4.425 by $4.44


I owe Victor $5.00.  I told him it would be 2 weeks before anything
happened.  You're right Victor, they are wonderful people.

Victor, Robert or I will send through some meter request next week.

Thanks

To: Faye Ellis/HOU/ECT@ECT
cc: Chris Germany/HOU/ECT@ECT
Subject: Re: New pipeline: Cove Point

Trade Zone has been set up

Faye Ellis
12/30/99 12:08 PM
To: Chris Germany/HOU/ECT@ECT
cc: Imelda Frayre/HOU/ECT@ECT, David Oliver/HOU/ECT@ECT, Scott
Mills/HOU/ECT@ECT
Subject: Re: New pipeline: Cove Point

Chris, we need to request trade zones for this pipe.

Pipe Code:  CVPT
Trade Zone:

Faye

Chris Germany
12/29/99 10:01 PM
To: Imelda Frayre/HOU/ECT@ECT, David Oliver/HOU/ECT@ECT, Sylvia A
Campos/HOU/ECT@ECT, Linda S Bryan/HOU/ECT@ECT, Donna Consemiu/HOU/ECT@ECT,
Faye Ellis/HOU/ECT@ECT, Scott Mills/HOU/ECT@ECT
cc: Victor Lamadrid/HOU/ECT@ECT, Robert Allwein/HOU/ECT@ECT, Katherine L
Kelly/HOU/ECT@ECT, Scott Neal/HOU/ECT@ECT, Robert Superty/HOU/ECT@ECT, Dan
Junek/HOU/ECT@ECT, Judy Townsend/HOU/ECT@ECT, Kate Fraser/HOU/ECT@ECT
Subject: New pipeline: Cove Point

I need a new pipeline set up.  CES currently has 1.5 BCF of LNG storage on
this pipeline under 3 separate contracts.  All 3 contracts expire 2/29/00.

Name:   Cove Point LNG Limited Partnership
Internet Address: http://www.latec.com/covepointlng/
Curve:   Tetco M3

This deal is currently entered in Sitara under deal 142034 as CPR Storage on
CGAS.  We have withdrawals of 75,000 day from the 12th through the 31st.

Linda, would you see if you have a copy of the contracts from CES?

Please let me know what I need to do.


Frank,

I am definitely interested in the resume. I can meet the candidate on campus
when
I visit my son. I am planning to come to Palo Alto around Thanksgiving.

Also, Energy and Power Risk Management (an English publication)
organizes every year in Houston a POWER RISK conference (typically in May).
They ask me for recommendations regarding
speakers. Would you be interested in participating?

Vince

"Frank A. Wolak" <wolak@zia.stanford.edu> on 11/13/2000 08:44:57 AM
To: vkamins@enron.com
cc:
Subject:

Vince,

  I am writing about a student of mine who is on the job market
this year.  When you stopped by my office, about 18 months ago
you asked if I had any students that might be appropriate for
your group.  Although I didn't at the time, now I do.  This student has
excellent technical skills, including an M.S. in Statistics
and a Ph.D. in Economics by the end of the current academic
year.  His dissertation research is on the investment behavior
of Independent Power Producers in the US.  As a result of research
assistance he has done for me, he knows the California market very well
and is familiar with the other ISOs.  I think he would be an excellent
match for you.  The only problem is that he will probably have many
other options available.  However, I definitely think he's worth a look.
If you'd like him to send you a CV, please let me know.  Thanks.

Frank Wolak

Professor Frank A. Wolak                           email:
wolak@zia.stanford.edu
Department of Economics                            Phone:  650-723-3944
(Office)
Stanford University                                FAX:  650-725-5702
Stanford, CA  94305-6072                           Phone: 650-856-0109 (Home)
World-Wide Web Page:  http://www.stanford.edu/~wolak Cell Phone: 650-814-0107


Brian T. Hoskins
Enron Broadband Services
713-853-0380 (office)
713-412-3667 (mobile)
713-646-5745 (fax)
Brian_Hoskins@enron.net

----- Forwarded by Brian Hoskins/Enron Communications on 11/15/00 09:39 AM
-----

	John House@ECT
	11/14/00 03:17 PM

		 To: Jim.House@pol.apachecorp.com, sscoolboy@yahoo.com,
timothy.dotson@Lyondell.com, Roberto Martinez/HOU/EES@EES, Brian
Hoskins/Enron Communications@Enron Communications, Denise
Naiser/ENRON_DEVELOPMENT@ENRON_DEVELOPMENt, Sherri Carpenter/HOU/ECT@ECT,
Christine Drummond/HOU/ECT@ECT
		 cc:
		 Subject: The Palm Beach Pokey

---------------------- Forwarded by John House/HOU/ECT on 11/14/2000 03:16 PM
---------------------------

THE PALM BEACH POKEY

You put your stylus in,
You put your stylus out,
You put your stylus in,
And you punch Buchanan out.
You do the Palm Beach Pokey
And you turn the count around,
That's what it's all about!

You put the Gore votes in,
You put the Bush votes out,
You put the Gore votes in,
And you do another count.
You do the Palm Beach Pokey
And you turn the count around,
That's what it's all about!

You bring your lawyers in,
You drag the whole thing out,
You bring your lawyers in,
And you put it all in doubt.
You do the Palm Beach Pokey
And you turn the count around,
That's what it's all about!

You let your doctors spin,
You let the pundits spout,
You let your retirees sue,
And your people whine and pout.
You do the Palm Beach Pokey
And you turn the count around,
That's what it's all about!

You do the Palm Beach Pokey,
You do the Palm Beach Pokey,
You do the Palm Beach Pokey,
That's what it's all about!


We got our phone bill yesterday and there was a call to Great Britain on it.
It was made on Christmas eve at 12:47PM. I don't think we made it but am
just checking to see if any of you'll did. I think you'll all were still
asleep then. It was for 11 minutes for $11.00. Let me know. I need to yell
at the phone scompany.   See you'll later love MOM.


EFF_DT PORTFOLIO_ID DOWN95
2/16/01  MANAGEMENT-COAL 0
2/16/01  MANAGEMENT-CRD 0
2/16/01  MANAGEMENT-GAS 318,520.
2/16/01  MANAGEMENT-PWR 177,196.
2/16/01  AGG-MANAGEMENT 429,242.


pls print for me.  thanks  df
---------------------- Forwarded by Drew Fossum/ET&S/Enron on 03/08/2001
02:32 PM ---------------------------

"SCIENTECH IssueAlert" <IssueAlert@scientech.com> on 03/08/2001 04:57:43 AM
To:
cc:

Subject: Problems Mount for Sierra Pacific Resources, Acquisition of Portland
General Appears Uncertain

Today's IssueAlert Sponsors:

[IMAGE]

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and current information on Customer Relationship Management (CRM),
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University, presenting programs sanctioned by the National Association of
Regulatory Commissioners (NARUC).
For advertising information, email Nancy Spring, or call (505)244-7613.

[IMAGE]

IssueAlert for  March 8, 2001

Problems Mount for Sierra Pacific Resources,
Acquisition of Portland General Appears Uncertain

by Will McNamara
Director, Electric Industry Analysis

The probability appears to be getting smaller that Sierra Pacific Resources
(NYSE: SRP) will complete its $3.1 billion acquisition of Portland General
Electric (NYSE: PGB) from Enron (NYSE: ENE). Enron disclosed in an 8K filing
with the Securities and Exchange Commission (SEC) on Feb. 27 that the sale of
Portland General had been delayed because of "recent events" in California
and Nevada that affected Sierra Pacific. Walt Higgins, chair and CEO of
Sierra Pacific Resources, told Wall Street analysts that the acquisition
agreement will terminate if it has not closed by May 1.

Analysis: Yesterday I wrote about the apparent collapse of the merger between
Consolidated Edison and Northeast Utilities (NU). Now, another high-profile
merger appears to be unraveling. As with the Con Edison / NU deal, the
problem facing Sierra Pacific Resources' pending purchase of Portland General
from Enron is based in economics. Namely, it appears that Sierra Pacific
Resources' recent financial problems have cast doubt on the company's ability
to complete its purchase of Portland General. This is not a good development
for Sierra Pacific Resources, as the financial and legal implications of this
potentially dead acquisition could exacerbate the company's current financial
problems.

First, let me provide some background on this deal. The origin of Sierra
Pacific Resources' attempt to acquire Portland General date back to November
1999. Enron had purchased the company in 1997 as a strategic move to
facilitate its intent to play a major role in the retail markets of
California and the Pacific Northwest. At the time, Enron saw itself as a
prototype for the future of the energy industry, adding transmission and
distribution capabilities as well as more diversified fuel resources to its
already successful wholesale marketing core. Stymied by the slow start of
competition in California and Oregon, Enron underwent a transformation in its
corporate philosophy. Under the growing direction of Jeffrey Skilling, Enron
no longer believed that it needed to own hard assets to retain its place in
the top tier of energy companies. That philosophy has served Enron well, as
its success in nearly all of its business sectors has been well documented.

Yet, Enron's transformation opened the door for Sierra Pacific Resources, a
relatively small and regionally based holding company, to move in for a
purchase of Portland General. Owning Portland General made more sense for
Sierra Pacific Resources than it did for Enron. Portland General, which
provides electric service to over 700,000 customers in the Portland-Salem
area, was viewed as a good acquisition target as it would help Sierra Pacific
Resources to gain scale and a foothold in two fast-growing states (Nevada and
Oregon). Sierra Pacific Resources agreed to pay Enron $2.1 billion for
Portland General, which included $2.02 billion in cash and assumption of
Enron's $80 million merger payment obligation. In addition, Sierra Pacific
Resources agreed to assume $1 billion in Portland General debt and preferred
stock, taking the total value of the purchase to $3.1 billion. Portland
General appeared happy with the scheduled sale from Enron, acknowledging that
its own core business "delivering safe and reliable power with a customer
service focus" was more in line with Sierra Pacific Resources.

However, a number of economic factors on Sierra Pacific Resources' side of
the table seem to be thwarting this acquisition. As I discussed in the Feb.
22 IssueAlert (available at www.consultrci.com), Sierra Pacific Resources
reported a significant fourth-quarter loss ($18.2 million) as a result of
soaring costs of power in the western United States. The company incurred
losses as a direct result of "the growing and unrecovered cost of purchased
power in the volatile wholesale market." As a result, Sierra Pacific
Resources filed with state regulators for an emergency rate increase.
"Without some rate relief, the cost of fuel and power is close to crippling
our ability to serve the needs of our customers," said Mark Ruelle, the
company's chief financial officer. The company attributed the latest
quarter's loss to nearly $258 million of unanticipated fuel and purchased
power costs.

Specifically, Sierra Pacific Resources reported a 4Q 2000 loss of $18.2
million, or 23 cents a share. This compared with a profit of $26.8 million,
or 39 cents a share, excluding a $56 million deferred energy write-off a year
ago. Including the write-off, the company reported a loss of $29.2 million,
or 42 cents a share, in 4Q 1999. For year-end 2000, the company reported a
net loss of $39.8 million or 51 cents per share, a 177-percent drop from
1999.

In addition, the company's stock has fallen steadily over the last few weeks
(at one point, dropping 11.8 percent to $10.80 on the New York Stock Exchange
Feb. 7). At the close of trading on March 7, shares of Sierra Pacific
Resources were priced at $13.80, which is still down from its 52-week high of
$19.43 and book value of $17.82. The drop in stock price could make it
difficult for Sierra Pacific Resources to secure the financing necessary to
complete the purchase of Portland General.

Meanwhile, Sierra Pacific Resources' available cash flow could be impacted by
possible restrictions placed on the sale of its power plants. The Public
Utility Commission of Nevada (PUCN) mandated divestiture as a condition of
the 1999 merger between Nevada Power Co. and Sierra Pacific Power Co, which
created the holding company Sierra Pacific Resources. Toward that end, the
holding company and its wholly owned utility subsidiaries commenced a public
auction of approximately 2,900 MW of power generation facilities. Of Sierra
Pacific Resources' nine power plants, which are mostly fired by natural gas
and coal, seven have been entered into sales agreements to companies such as
Dynegy and NRG and will be sold upon final regulatory approval.

However, over the last few weeks, there has been growing concern that Nevada
regulators would not approve pending sales or authorize the sale of
additional power plants by Sierra Pacific Resources, thus preventing the
company from using the proceeds to pay for the acquisition of Portland
General. Perhaps out of fears about depleting the Nevada's power supply, the
Attorney General's Bureau of Consumer Protection, the Southern Nevada Water
Authority and the AFL-CIO have urged that the sale of the plants be delayed
or canceled. Further, Nevada Governor Kenny Guinn has called on the PUCN to
reconsider the 1999 order that required Sierra Pacific Resources to sell the
plants owned by its two utilities, Nevada Power and Sierra Pacific Power. Any
available cash that Sierra Pacific Resources was planning to use from the
power plant sales to support its acquisition of Portland General may not
materialize if the sales agreements are delayed or terminated.

Ironically, Nevada Power and Sierra Pacific Power Co. just received approval
from the PUCN to secure $1.4 billion in bank loans, bond financing and
preferred securities. However, due to agreements that the utilities
previously made, none of the borrowed money may be used, directly or
indirectly, to financially support its parent's acquisition of Portland
General.

Thus, Sierra Pacific Resources seems to be between a rock and a hard place
regarding this purchase, which it apparently still wants to complete. It
would appear that Sierra Pacific Resources will have difficulty financing the
purchase of Portland General due to the combination of its significant
financial losses, plunging stock prices and possible restrictions against the
sale of its power plants. Presumably, these are the "recent events" to which
Enron referred in its SEC filing.

It is fairly clear that Enron no longer wishes to own Portland General and
believes that the company does not fit into its strategy for continuing
growth. What remains in question, however, is what will happen if Sierra
Pacific Resources' pending acquisition is not completed by the May 1
deadline, thus terminating the sales agreement. The problems associated with
the Con Edison / NU merger are leading to litigation. One can't help but
think that lawsuits would be inevitable in the Enron / Portland General /
Sierra Pacific Resources case as well, as Enron presumably would seek to be
compensated in some way for the $3.1 billion that the deal includes.

Further complicating matters for Sierra Pacific Resources is a growing
movement to municipalize the electric markets in Las Vegas and Henderson,
Nev. On Jan. 11, the Southern Nevada Water Authority suggested that the
agency could become a public power authority. Pat Mulroy, general manager of
the water authority, recommended that the agency buy power on wholesale
markets and possibly generate electricity from some of its own power plants
to serve cities in the area. Efforts to municipalize electric systems in the
southern half of the state could potentially gain momentum if Sierra Pacific
Resources' financial problems worsen.

An archive list of previous IssueAlerts is available at
www.ConsultRCI.com

[IMAGE]
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Copyright 2001. SCIENTECH, Inc. All rights  reserved.


BUSINESS HIGHLIGHTS

eSource
eSource, Enron's research group, has experienced an overwhelmingly positive response to the research training which it has hosted.  Participation and interest by Enron employees has exceeded expectations and many classes were quickly filled.  As a result, repeat classes have been offered and new sessions have been added to the program.  In addition to the Lexis-Nexis and Dow Jones classes, eSource has now begun hosting sessions on Piranha (financials and pricing information), Investext (analyst reports and market analysis), Global Access (financials and corporate activity), and Securities Data Corp. (M&A, debt).   eSource has also arranged long distance sessions using interactive web tools for Enron employees around the world.  Watch for e-mails announcing new training sessions, either in Houston or in a virtual desktop mode.

Since our launch in December, the eSearch website has received over 230,000 hits.  The site today offers Enron employees access to 34 electronic databases.  These databases offer the latest financial and business on-line research capabilities in a cost-effective manner.  In this era of information explosion, databases are constantly being reviewed to ensure that Enron's research needs are being met.  If you know of a professionally relevant database that might be added to eSearch, let us know.  Meanwhile, to further fulfill Enron's research needs, eSource is arranging for desktop access to good-old-fashioned libraries too.  Books from public and local university libraries can be located, borrowed and delivered to employees' desks.  This should be particularly helpful for those with more specialized or technical research needs.

We are also proud to report that at a recent local research conference, Enron's eSource was featured as an industry trailblazer for having invented itself into a combined virtual library and intranet-based research center capable of delivering a broad range of research products and services via the user's desktop.  Attendees from Reliant, Shell, Halliburton and ExxonMobil and others were duly impressed.

As for the future, watch for Version 2.0 of the eSearch website, http://esource.enron.com, scheduled to launch soon.  It will feature greater functionality and additional content.  Look for new features like "Industry Overviews" and links to information providers like Frost & Sullivan, Country Watch, and World Energy Markets.

IN THE NEWS

Chicago And Its Suburbs Pick Enron, ComEd For Power Deals
06/06/2001  Dow Jones Energy Service (Copyright (c) 2001, Dow Jones & Company, Inc.)
CHICAGO -(Dow Jones)-The City of Chicago and 47 suburban communities have decided to divide new deals for 400 megawatts of power between Enron Corp. (ENE) and local utility Commonwealth Edison Co., Chicago officials said Wednesday.
In the largest power purchase agreement in Illinois since the state choose to deregulate the industry in 1997, the local government groups will get 60% of their power from Enron and 40% from Exelon Corp.'s (EXC) ComEd. The municipalities use the power for public buildings and public transportation.
Chicago announced Monday that the group has picked ComEd to meet the renewable target by providing 80 megawatts of power created with landfill gas, wind and other sources. ComEd will also provide the coalition with another 80 megawatts of power generated with fossil fuel and nuclear plants, and Enron will provide the other 240 megawatts. The new contracts are expected to go into effect this year.
"We used our purchasing power as local governments to get the best price we could and at the same time to promote competition in Illinois. Enron gave us the most competitive price,"  Chicago Mayor Richard M. Daley said at a press conference.

WELCOME
New Hires
EGM  - Jennifer Morris, Mike Reen, Daniel Fuller, Jason Paterniti
ENA  - Craig Hawkins, Carol Langston, Mark Morrow, Harlan Murphy, Bruce Petitt, Emily Schwarzbach, Alice Wright, Allyson Zykorie

Transfers (to or within)
ENA - Thomas Kalb, Debra Brannen, Juan Camarillo, Richard Orellana
EGM - Joana Bekerman, Eric Tipp, Kellie Metcalf, Ricardo Charvel, Jason Andrade
EIM - Jaime Araoz, Gabriel Chavez, Enrique Cadena, Rosalinda Castillo, Kimberly Chick, Ana Morena, William Brown, Grisela Escamilla, Paul Burkhart, Jodi Coulter, Douglas McDowell, Catherine Pernot

NUGGETS & NOTES

Enron is hosting the Chicago Energy Risk Management Seminar at The Drake Hotel in Chicago on June 14, 2001.  Topics include: Power Outlook, Natural Gas Outlook, Hedging Strategies, Weather Risk Management and Pulp and Paper Risk Management. The RSVP deadline is June 8th so please contact Laura Pena as soon as possible at x 3-5376.  This is a great event for "new" as well as established customers.  There will be a cocktail reception immediately after the presentations.  Enron will also be hosting seminars in Atlanta, Houston, Denver and San Francisco.  Dates to be announced soon.

Congratulations to Kathy and Craig Taylor, manager in East Origination. They are the proud parents of a baby girl, Katherine Montgomery, born on May 25.

Travel tip of the week:
When booking through TAP or ClickTrip, use preferred domestic airline carriers to recognize special Enron discounts.
	American		28%		American West		15%
	Continental		17%		Delta			10-28%
	Northwest		20%		TWA			19-25%
	United			20%		US Airways		30%

Please note: discounts are confidential and should not be disclosed to anyone other than Enron employees.

EnronOnline Statistics
Below are the latest figures for EnronOnline as of June 5, 2001.

*	Total Life to Date Transactions > 1,045,000
*	Life to Date Notional Value of Transactions > $630 billion

experience Enron
Announcing enhancements to experience Enron:
?	To begin your customer's Enron experience, we will send out customized invitations with a Guest Check-In Card that contains detailed instructions about check in.
?	experience ENRON has partnered with the Plaza Reception Desk Staff to create a less stressful check in process for your customers.  Once they present their card, the Plaza Reception Desk Staff will welcome them and present them with a prepared experience ENRON name badge.
?	experience ENRON has also created a new look for your meetings.  Our new table tents, welcome folders, name badges, agendas and presentation templates all have the same look to maintain a consistent feel throughout the visit.
?	All of this is to ensure that your guest has a unique and customized experience that will exceed their expectations and help you reach your business goals faster.
For more information on experience ENRON, visit our website at experience.Enron.com.

LEGAL STUFF
The information contained in this newsletter is confidential and proprietary to Enron Corp. and its subsidiaries.  It is intended for internal use only and should not be disclosed.


The following report is comprised of what was discussed at the Commission meeting held tonight at approximately 7 PM EST and additional intelligence gathered from FERC staffers after the meeting by Joe Hartsoe:

Physical Withholding -- To prevent physical withholding, the plan will require sellers with PGA's to offer all their available power in real time.  All California generators, even those not subject to FERC price regulation, will be required to sell into the ISO's real time market as a condition of their use of the ISO's interstate transmission lines. Hydroelectric facilities will be exempted. (24-7 for 1yr)

Price Mitigation -  The plan will establish a single market clearing price auction for the real time market.  During Stage 1, 2 and 3 emergencies in the ISO's real time market, each generator (other than hydro) with a participating generator agreement is required to offer all available power and bid its marginal cost based on the generator's heat curve, emission rates, gas costs and emission costs, plus $2 for O&M.  The gas cost will be the average daily cost of gas for all delivery points in California; emissions are to be based on Cammon Fitzgerald(?).  The gas cost and emissions will be published the day after, for use on the following day.  A single market clearing price is determined in real time for all generators.  Highest bid sets the clearing price.  Each gas fired generator must file with FERC and the ISO, on a confidential basis, heat and emission rates for each generating unit.  The ISO will use these rates to calculate a marginal cost for each generator, including maintenance and operating costs.  In the event a generator submits a bid higher than the proxy price, the generator must, within 7 days of the end of each month, file a report with FERC and the ISO justifying its price.  FERC has 60 days to review/act.  No opportunity costs in real time.  Marketers are in the same boat, as they must be prepared to justify bid at purchased cost based on specific purchases or portfolio with no opportunity cost.  However, credit sleeves are permissible.

Demand Response - Beginning June 1, only public utility load serving entities must submit demand side bids to curtail load and identify the load to be curtailed under those bids.  FERC is attempting to break the demand curve.  (24-7)

Outages -- PGA generators will coordinate planned outages and report forced outages in accordance with the Commission Staff proposal adopted by FERC.

Term - Order expires one year from date of issuance.

RTO Filing - California ISO and two Utilities must make RTO filing by June 1 or Order lapses with no further effect.

ISO Reporting - On September 14, 2001, ISO must file a status report on how things are working and how much generation has been built.  Comments are due in 15 days.  Quarterly reports thereafter.

Revocation of Market Based Rate Authority and Refunds - The market based rate authority of all public utilities is conditioned on 1) no physical withhold of capacity, and 2) no inappropriate bidding behavior.  Inappropriate bidding behavior includes bidding unrelated to known characteristics of the generation unit or without an input cost basis or bidding not based on unit behavior.  An increased bid based on increased demand could apparently be inappropriate.  In addition, "hockey stick" bids are expressly prohibited (i.e.  bidding 95% at marginal cost and 5% at a much higher level).

Limited 206 filing - Applies to sales in the WSCC, outside California.  Refund conditions apply in real time spot markets when contingency within a control area falls below 7%.  Control areas are not required to publish when this condition occurs.  Apparently anything over marginal cost must be justified.  All marketers and non-hydroelectric generators must offer to sell contractually and physically available capacity/energy to a location within WSCC.  FERC is attempting to mirror the rules applied in California.  Comments are due in 10 days on the 206 investigations.  The refund effective date is 60 days from publication of the Order.

Nox Limits in California --  Must sell requirements do not apply if a unit is prohibited from running by law.  However, it appears that incurring fines does not overcome the must sell requirement- just include the fines as part of the price bid.  Also if Nox is limited, may seek to show that generation would have been sold elsewhere or at different times for determining price.

Surcharge to pay past amount due -- Comments are due in 30 days on 1) whether FERC should require the ISO to surcharge parties for payment into an escrow account to pay past costs and 2) the effect this surcharge would have on the PG&E bankruptcy filing.

No mention was made at the meeting as to issue of exports of power from California.  The Order is not finally drafted as of yet, and the status of the foregoing items could change upon issuance of the Final Order.  We will keep you posted.

RA


Hey! I'm so brain dead this morning I didn't even notice. But I'm sooooo glad
you had a good experience. I just think he's the nicest guy, so I bombard him
with people needing haircuts constantly. You know when I first went to him it
was because I couldn't get in to see my regular lady and he was the only
stylist who wasn't booked - now he never has a spare second! It makes me feel
like a proud mother. Thanks for letting me know.

Kate

Emily Butler
03/23/2001 10:19 AM
To: Kate Symes/PDX/ECT@ECT
cc:

Subject: Ziva

Brett is awesome!
I got my haircut yesterday and I LOVE it.
Thanks so much for the recommendation!
: )  Em


We have resolved the issue partly.  John now reports directly to Hunter.  Give me a ring to discuss.  I felt your voicemail needed sorting out - you did sound annoyed, quite rightly so I think we have solved most of the problem.

By the way - give me a date and I'll be in Chicago.


yes.

------------------------------------------------------------------------------
---------------------------

Michelle Cash
Enron North America Corp.
1400 Smith Street, EB 3823
Houston, Texas  77002
(713) 853-6401
michelle.cash@enron.com

This message may contain confidential information that is protected by the
attorney-client and/or work product privileges.

	FMackin@aol.com
	06/29/2000 11:23 AM

		 To: Michelle.Cash@enron.com
		 cc:
		 Subject: Clarification; Daily Labor

Michelle,

Re:  "This is awful," the behavior of the supervisor, the president or the
court?

<g>

Pat


Please click on the attached link to launch your Holiday Party invitation.

 http://invitation.enron.com

Please direct any questions to Dorie Hitchcock via email.


Jeff,

Thanks for the update.  For purposes of keeping the contract straight, I also
need the lien waiver.  A single invoice for the outstanding $1,502,355 will
suffice.

As a heads up, we will probably need a substitute LC post assignment.

Regards,

Chris

 -----Original Message-----
From:  jeffrey.darst@ps.ge.com@ENRON
[mailto:IMCEANOTES-jeffrey+2Edarst+40ps+2Ege+2Ecom+40ENRON@ENRON.com]
Sent: Friday, May 25, 2001 8:03 AM
To: Booth, Chris
Cc: sharon.torre@ps.ge.com
Subject: RE: Blue Dog

Chris,

The bank will issue the LOC by the end of next week, perhaps as early as
Wednesday.  We are using E-Next Generation LLC as the beneficiary.  The LOC
will be mailed to you.  Do you still require a Lien Waiver?

Also, do you want new invoices?  If so, will one for $1,502,355 be
sufficient?

Regards,

Jeff

-----Original Message-----
From: Chris.Booth@enron.com [mailto:Chris.Booth@enron.com]
Sent: Thursday, May 24, 2001 3:54 PM
To: IMCEANOTES-jeffrey+2Edarst+40ps+2Ege+2Ecom+40ENRON@enron.com
Cc: Ben.Jacoby@enron.com
Subject: RE: Blue Dog

Jeff,

Can you give me an update on where GE stands on providing the Letter of
Credit as discussed in my letter of 21 May 2001.
Regards,

Chris

    -----Original Message-----
   From:   jeffrey.darst@ps.ge.com@ENRON

[mailto:IMCEANOTES-jeffrey+2Edarst+40ps+2Ege+2Ecom+40ENRON@ENRON.com]

   Sent:   Thursday, May 24, 2001 12:05 PM
   To:     Booth, Chris
   Cc:     william.maclean@ps.ge.com
   Subject:  Blue Dog

   Chris,

   I will get you re-established on PNet, with the correct e-mail address..
   For the B&V folks, I need names, e-mail addresses, and phone numbers,
   (nice,
   but not required).

   Just a reminder, the site change process can not start until the new
   site
   conditions are identified to GE.  The cost and cycle estimate then takes
   about 4 weeks.

   Regards,

   Jeff
   Global Power Plant Systems
   518-385-0663
   518-381-1513 (fax)


---------------------- Forwarded by Mark Fisher/EWC/Enron on 07/10/2002 09:36
AM ---------------------------

Joe Chapman
07/10/2002 08:45 AM
To: Mark Fisher/EWC/Enron@Enron
cc:

Subject: Re: Curtail200206.db Question

Hi Mark,

The message at 10:47 says the the computer was rebooted at that time.  That
is about the only way that I know of that this message would be recorded.

When the TrbCurtail Service is started it does not remember what turbines
were curtailed.  It waits 10-minutes after starting before issuing any
commands to calculate a 10-minute average.  After the 10 minute startup wait,
the first command output from this program would have released all turbines
that were currently curtailed, and curtailed new turbines as needed to keep
the 10-minute average MW output at the curtailment setpoint.

So at 10:57 any turbines that were curtailed before that time would have been
released.
The curtailment log file Visupro creates at the turbine should be able to
verify this if needed
.

Database:

 System
Index Number Date/Time Msg
10843 840006029 6/19/02 10:36 Energy curtailed  -> Turbine curtailed
10847 840006250 6/19/02 10:47 TrbCurtail Service Started -> Computer rebooted
10855 840006029 6/19/02 10:47 Turbine Com Established -> Com established to
turbine

Joe

Mark Fisher
07/09/2002 03:07 PM
To: Joe Chapman/EWC/Enron@ENRON
cc: Jeff Duff/EWC/Enron@ENRON

Subject: Curtail200206.db Question

Joe,

Attached is the Curtail200206.db file. I have a question about a sequence of
events. For turbine 840006029 on June 19th the turbine is "Energy curtailed"
(Index = 10843), THEN it has the message "Turbine Com Established" (Index =
10855). Then there are no other messages (for that turbine) until a "Energy
curtailed" message (Index = 11134).

Is there anything I can assume about the time between the curtailment
messages? For example, was the turbine uncurtailed when the com established
message was recorded? Or are did the turbine become uncurtailed and no
message was recorded?

Thanks,
Mark


Kay:

It won't be a big deal if we can get these documents into Federal Express
Tuesday night for delivery Wednesday as indicated below.  If there is a
chance that Jake will be late so as to miss the Fed Ex deadline, then we
need to make alternative arrangements for signature.  Otherwise Paul
Hastings will be forced to renegotiate its legal opinion with Freshfields,
and we owe them the courtesy of letting them know this first thing Tuesday
morning, as I indicated to them as early as Thursday of last week that we
had no objection to getting at least the original membership certificate to
them by overnight delivery prior to closing to hold in escrow until the
closing, in order to satisfy opinion issues associated with perfection of
the lien on the membership interest.  Please let me know.  Thanks.

As soon as I get back to the office, I will re-check the Salmon resolutions
electing officers to confirm Chris Calger's title with Salmon and will let
you know.

Carolyn M. Campbell
King?& Spalding
713-276-7307 (phone)
713-751-3280 (fax)
ccampbell@kslaw.com <mailto:ccampbell@kslaw.com>

-----Original Message-----
From: Kay.Mann@enron.com [mailto:Kay.Mann@enron.com]
Sent: Monday, April 30, 2001 6:38 PM
To: Campbell, Carolyn
Subject: RE: Delta Documents - Addresses for Delivery

I think we will be able to get the documents you listed signed tomorrow,
but Jake won't be here before 7pm, so anything he is signing won't be ready
until Wednesday am.  It seems to me that this isn't a big deal, but I would
appreciate it if you could confirm.

Thanks,

Kay

"Campbell, Carolyn" <CCampbell@KSLAW.com> on 04/30/2001 02:59:43 PM

To:   "'Kay.Mann@enron.com'" <Kay.Mann@enron.com>
cc:

Subject:  RE: Delta Documents - Addresses for Delivery

Kay:

The original membership certificate for the 80% interest should be
forwarded
for delivery on Wednesday, May 2, to the following address:

Ms. Isabel Parker
Freshfields Bruckhaus Deringer LLP
520 Madison Avenue, 34th Floor
New York, NY  10022
(phone 212-277-4025)

(Greg has asked that the membership certificate be faxed to him (fax
203-674-7646) and me (fax 713-751-3280) on Tuesday before depositing this
with the overnight courier).

If you will also be sending the original signature pages to the Turbine
Contract and the Amended and Restated LLC Agreement, these documents should
be forwarded for delivery on Wednesday, May 2, to:

Mr. Gregory F. Lang
Paul Hastings Janofsky & Walker LLP
1055 Washington Blvd.
Stamford, CT  06901
(phone 203-961-7446)

I am happy to get these documents to the correct place if the signed
documents are in Houston on Tuesday.  Let me know.  Thanks.

Carolyn M. Campbell
King?& Spalding
713-276-7307 (phone)
713-751-3280 (fax)
ccampbell@kslaw.com <mailto:ccampbell@kslaw.com>

-----Original Message-----
From: Kay.Mann@enron.com [mailto:Kay.Mann@enron.com]
Sent: Monday, April 30, 2001 11:29 AM
To: Campbell, Carolyn
Subject: RE: Delta Documents

Please confirm absolutely that fax signatures will be sufficient.

I need the address of where to send the membership certificate.  There is
not enough time for the document to pass back through Houston if the
Portland team wants to sign the documents.

Kay

"Campbell, Carolyn" <CCampbell@KSLAW.com> on 04/30/2001 11:21:59 AM

To:   "'Kay.Mann@enron.com'" <Kay.Mann@enron.com>
cc:

Subject:  RE: Delta Documents

Kay:

The original membership certificate needs to be in the lender's hands
(i.e.,
Isabel Parker's office) on Wednesday in order to release escrow.  If you
have the original to me by Tuesday, I can forward it to Isabel by overnight
delivery for Wednesday.  It must be an original, in that the lender's lien
on the membership interest is not perfected without possession of the
original certificate.  With respect to the remaining documents, fax copies
of signature pages on the closing date should be sufficient.

Carolyn M. Campbell
King?& Spalding
713-276-7307 (phone)
713-751-3280 (fax)
ccampbell@kslaw.com <mailto:ccampbell@kslaw.com>

-----Original Message-----
From: Kay.Mann@enron.com [mailto:Kay.Mann@enron.com]
Sent: Monday, April 30, 2001 11:20 AM
To: Campbell, Carolyn
Subject: RE: Delta Documents

The problem is in getting the original in their hands (where?) by tomorrow.
Does it have to be an original?

Kay

"Campbell, Carolyn" <CCampbell@KSLAW.com> on 04/30/2001 11:04:21 AM

To:   "'Kay.Mann@enron.com'" <Kay.Mann@enron.com>
cc:

Subject:  RE: Delta Documents

Kay:

Can we at least get the membership certificates signed by Tuesday?  This
seems to be the only document required in advance of closing.  If we can't
get the 80% membership interest certificate in the lender's possession on
the closing date, then there is a lien perfection issue for them to deal
with, and I thought we could accommodate their request and avoid the
problem
altogether.  Please advise, as Greg and Isabel will be calling within an
hour or so to finalize the mechanics on this.  Thanks.

Carolyn M. Campbell
King?& Spalding
713-276-7307 (phone)
713-751-3280 (fax)
ccampbell@kslaw.com <mailto:ccampbell@kslaw.com>

-----Original Message-----
From: Kay.Mann@enron.com [mailto:Kay.Mann@enron.com]
Sent: Monday, April 30, 2001 10:40 AM
To: Campbell, Carolyn
Subject: Re: Delta Documents

I've asked GE for the LOC by Wednesday, but I haven't gotten a response.

I'll have difficulty getting executed docs by Tuesday, since sigs are
coming from Portland.  I'll have to check to see what can be done.

Kay

"Campbell, Carolyn" <CCampbell@KSLAW.com> on 04/30/2001 10:02:44 AM

To:   "'kay.mann@enron.com'" <kay.mann@enron.com>
cc:

Subject:  Delta Documents

Kay:

Can you get executed documents back to me on Tuesday?  Greg has requested
that we send the original membership certificate representing the 80%
interest to the collateral agent Tuesday night by overnight delivery to
hold
in escrow until closing, in order that the collateral agent is in
possession
of the certificate (for purposes of legal opinions) upon closing on
Wednesday.  Greg is planning to fax signature pages of all of their closing
documents later today.  (I will be out of the office at a meeting with
another client most of the afternoon today).

There is one last question with GE dealing with the letter of credit for
the
retention amount, as this affects our disbursement instruction letter.  I
advised Greg that GE's normal practice was to send the retention L/C after
receipt of payment.  He is considering this, but may want to talk to GE
about the ability to present the L/C at closing.  Do you have any thoughts
on this?

Carolyn M. Campbell
King & Spalding
713-276-7307 (phone)
713-751-3280 (fax)
ccampbell@kslaw.com <mailto:ccampbell@kslaw.com>

Confidentiality Notice
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message in error, please notify the sender immediately by e-mail and delete
all copies of the message.

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This message is being sent by or on behalf of a lawyer.  It is intended
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the named addressee, you are not authorized to read, print, retain, copy or
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message in error, please notify the sender immediately by e-mail and delete
all copies of the message.

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This message is being sent by or on behalf of a lawyer.  It is intended
exclusively for the individual or entity to which it is addressed.  This
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message in error, please notify the sender immediately by e-mail and delete
all copies of the message.

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This message is being sent by or on behalf of a lawyer.  It is intended
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all copies of the message.


Hi Calvin

I spoke with Rickey (boy, is he long-winded!!).  Gave him the name of our
credit guy, Russell Diamond.

Thank for your help!


fyi...
---------------------- Forwarded by Karen Denne/Corp/Enron on 05/11/2001
02:36 PM ---------------------------

Karen Denne
05/11/2001 02:16 PM
To: Kenneth Lay/Corp/Enron@ENRON
cc: Rosalee Fleming/Corp/Enron@ENRON, Jeff Dasovich/NA/Enron@Enron (bcc:
Karen Denne/Corp/Enron)

Subject: Information for Call to LA Mayor Dick Riordan

Ken -- Thank you for making next Thursday, May 17 available for CEO meetings
in California.  We are working to set up two meetings -- one in Los Angeles
and one in Silicon Valley (we'll call on Scott McNealy's contact person to
help pull the Northern California meeting together).   For the Los Angeles
meeting, we'd like you to call Mayor Dick Riordan (213-847-3456) and ask for
his help in pulling together a group of key, influential business leaders.
As background, Riordan is a very wealthy Republican businessman who has been
term-limited out and has not yet made public his future political aspirations
(a bid for governor has been mentioned by insiders).

You might congratulate him on helping to settle the Writer's Guild strike and
ask if he'd now like to resolve the energy crisis (He's in a bit of a spat
with Dave Freeman over who can claim credit for LADWP's success during this
energy situation -- see attached LA Times article).  You can say you've been
told that he was one of the clearer heads during the deregulation process and
were instrumental in keeping DWP out of the regulatory mess.

This is an opportunity for Riordan to help broker a solution, and that's why
you're calling him.  You met with Robert Day (Trust Co of the West) who
suggested that you call Riordan and enlist his support.

Explain about our comprehensive solution -- business support is critical to
garner political support.

You'll be in Los Angeles next Thursday.  Ask if he could invite and host a
meeting of key business leaders and introduce you.  I've attached a suggested
list of prominent businessmen, close associates and personal friends of
Riordan's.  We'd like to position this meeting as an insider's conversation
of what's going on with the energy situation.  This meeting should be for
principals only.

Ask Riordan to identify someone in his office who we can work with to set up
the meeting.  Enron's consultant in LA (Marathon Communications) will work to
coordinate the event.

If Riordan is not available next Thursday, ask him if he would ask Eli Broad
(chairman of Sun America and a Democratic billionaire) or Jerry Perenchio
(chairman of Univision) to host the meeting.

Proposed Invitees

*Eli Broad - Chairman, Sun America
*Ron Burkle - Yucaipa Companies
Jeffrey Katzenberg - DreamWorks
Sherry Lansing- Paramount
Nelson Rising- Catellus
Bob Daly - LA Dodgers
Ray Irani - Occidental Petroleum
*Jerry Perenchio - Univison
Michael Eisner/Bob Iger - Disney
Ed Roski - Majestic Realty
Earvin Johnson/Ken Lombard - Johnson Development Corporation
Bruce Karatz - Kaufmann & Broad
Terry Semel - Yahoo!
Gary Winnick - Global Crossing
Henry Yuen - Gemstar
*Carl McKinsey
*Liam McGee - Bank of America
*Barry Munitz - Getty Trust
*Gordon Binder - Amgen (ret)
David Baltimore - Cal Tech
Danny Villanueva - Bastion Capital
Phil Anschutz - Qwest Communications, Staples Center
*Dennis Tito - civilian spaceman (former LADWP Commissioner)
Kent Kresa - Northrop Grumann

Sunday, May 6, 2001
Riordan and Freeman's Feud Erupts in Public
Power: Each questions the other's role in keeping the city free of
California's energy crisis.
By MICHAEL FINNEGAN, TERENCE MONMANEY, Times Staff Writers

?????With California mired in energy troubles, Mayor Richard Riordan and his
former power chief S. David Freeman trumpet the extraordinary fortune of Los
Angeles: no rate hikes and no blackouts.
?????Yet Riordan and Freeman have sullied their mutual success story by
waging bitter campaigns to discredit each other--at first behind the scenes
but now in public.
?????Pettiness, ingratitude, conflicts of interest, overblown claims of
achievement: Such is the back and forth between two leaders who would seem to
have good reason to pat each other on the back.
?????To Freeman, who has resigned as general manager of the L.A. Department
of Water and Power to become chief energy advisor to Gov. Gray Davis, it
seems Riordan resents his high-profile role in trying to steer California out
of the energy crisis.
?????So the mayor, Freeman charged, has elbowed his way into energy issues
that he is ill-equipped to handle and taken steps along the way that could
harm the environment.
?????"With all due respect, I have 25 years of experience and knowledge--and
he has 25 days," Freeman said. "But he's the mayor, and he didn't like it
that I didn't just say yes to everything he came up with."
?????To Riordan, Freeman's efforts to fight air pollution have given short
shrift to the threat of skyrocketing power rates in Los Angeles. The mayor
said Freeman also failed to recognize potential conflicts of interest between
his city and state roles in the power crisis. And he scoffed at Freeman for
saying he had lifted morale at DWP.
?????"Morale was terrible under him," Riordan said. "I mean, they are so
relieved right now."
?????The backbiting has left associates suspecting the clash is really about
egos. City Councilwoman Ruth Galanter sees Riordan and Freeman as proud,
successful men unable to say, "I couldn't have done it without X, Y and Z."
?????"Each of them is used to being the boss and taking pleasure at being
recognized as the boss," she said.
?????Much of the conflict has taken place in private meetings. And the mayor,
a Republican multimillionaire, has taken pains to play down his dispute with
Freeman, a liberal Democrat from Tennessee who wears a cowboy hat and speaks
with a Southern drawl.
?????In an interview after his resignation, Freeman laid out the conflict
point by point, often in terms bluntly critical of the mayor. One of his
concerns, Freeman said, was that Riordan in his final two months as mayor
could reverse the agency's progress in protecting the environment.
?????Freeman cited Riordan's plans concerning coal-fired power plants in
Nevada and Utah that are partly controlled by the DWP, the nation's largest
municipal utility. The first is the Mohave Generating Station in Laughlin,
Nev., a plant that has been blamed for spreading some of the haze that
shrouds the Grand Canyon. The DWP had planned to sell its stake in the plant,
but Freeman said Riordan ordered him to back out of the sale.
?????He described the mayor's move as a sign that Riordan and his appointees
on the board that oversees DWP were "completely insensitive to the fact that
that power plant is one of the most environmentally troubling plants in the
West."
?????"I've worked real hard to try to build some environmental sensitivity
into the DWP policy," Freeman said. "And I am concerned as to whether the
current commissioners and the mayor have that sensitivity, and what they
might do in the interim to basically overturn the progress we've made."
?????The other plant is part of the Intermountain Power Project in central
Utah. Riordan has proposed building a new coal-fired generating unit there,
but Freeman said he objected because of the pollution it would cause.
?????In both cases, Riordan said he was striking the appropriate balance
between protecting the environment and meeting the energy needs of Los
Angeles at an affordable cost. By keeping its share of the Mohave plant and
expanding the Utah plant, Los Angeles can avert the astronomical price hikes
of natural gas--and the sharp rise in ratepayers' bills that would follow,
Riordan said.
?????Natural gas, which provides 26% of the fuel for DWP plants, causes less
air pollution than coal, which provides 51%. The rest is mainly nuclear and
hydroelectric. Los Angeles has averted rate hikes and blackouts in part
because the DWP relies less on natural gas than most other California power
providers.
?????"I favor clean air and more natural gas, but not to the point where
we're going to destroy the economy of Los Angeles," Riordan said.
?????On the Mohave plant, Riordan questioned the benefit of selling the
city's share to a buyer that would simply continue running it.
?????"It's still going to be coal-driven," he said. "How does selling it help
the environment?"
?????The tension between the two has built steadily as the state power crisis
has worsened. With the charismatic DWP chief drawing favorable news coverage
in stories on how L.A. has dodged the crisis, Riordan and the DWP
commissioners began to view him as "too big for my britches," Freeman said.
?????The conflict reached its peak on April 17, the day Freeman resigned to
become the governor's advisor. The DWP board president, Kenneth T. Lombard,
said the mayor told commissioners that day that "it made the most sense to
release him immediately."
?????"All we were doing, frankly, was release him from his responsibilities,
and then whatever time he needed to clean out his office was fine with us,"
Lombard said.
?????From Riordan's standpoint, Freeman needed to be stripped of his
authority right away because of a potential conflict of interest: The city
utility sells surplus power to the state, so Freeman would be on both sides
of the sales.
?????Freeman, who had voluntarily bowed out of a DWP meeting on the state
power crisis earlier that day, was outraged at his sudden release, in part
because he was denied the chance to say goodbye to agency employees. In an
interview, he called the conflict of interest assertion "complete malarkey."
?????"The insinuation that I have done anything less than protect the
interests of the city of Los Angeles is bordering on slanderous, considering
what I've accomplished here," he said.
?????Brian D'Arcy, who heads the union local that represents 6,000 DWP
employees, agreed that Riordan and his commissioners "kind of ran him out of
here. For David to be summarily jettisoned out of here without even a
howdy-do is absolutely tacky," D'Arcy said.
?????Riordan said Freeman deserves "an A-plus" for his work at DWP. The mayor
conceded that he knew of nothing that Freeman had done "to hurt Los Angeles."
But, he added, "when you have a conflict of interest, you have to act before
anything happens."
?????Freeman has long bridled at the oversight of DWP, not just by the mayor,
but by the agency's board and the City Council. In 1998, he called for City
Charter amendments to consolidate authority in a more independent board of
directors. The proposal went nowhere.
?????Freeman's concerns were echoed in a report to be released Monday. The
Rand Enterprise Analysis report was commissioned by the DWP. It calls for
restructuring DWP management much the way Freeman proposed. But Riordan and
Galanter, who chairs the Council's Commerce, Energy and Natural Resources
Committee, rejected the concept. Copyright 2001 Los Angeles Times


Rice/Enron Finance Seminar Participants:
Jennifer Carpenter from New York University will present a paper co-authored with Viral V. Acharya, entitled "Corporate Bond Valuation and Hedging with Stochastic Interest Rates and Endogenous Bankruptcy," at 3:00pm on Friday, November 30 in Room 115.  The full text of the paper is available in PDF form on the seminar website:http://www.ruf.rice.edu/~jgsfss
Please note that this seminar will begin at 3:00pm and close at 4:30pm.
Albert
Fu-Kuo Albert Wang
Assistant Professor
Jones Graduate School of Management -- MS 531
Rice University
6100 Main Street
Houston, TX 77005
Phone: 713-348-5404
Fax:     713-348-5251
email: wangfa@rice.eduhttp ://www.ruf.rice.edu/~wangfa/


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