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<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: HP -- confidential internal document Body:: Matt: As GSS Business Development transitions the HP relationship for broadband to your team there are several issues I wanted to clarify in terms of how the relationship has been developed and who the contacts have been to date. Additionally I outlined the discussion points/action items from this morning's meeting you held with Jennifer Medcalf and myself. Per your request the HP presentation complete with a listing of HP's business partners was e-mailed to you this morning. HP contacts to date: Bill Lovejoy Western Gulf Area Sales Manager Houston TX #(713)-439-5587 (Gerry Cashiola's boss) Gerry Cashiola sales representative Houston TX #(713)-439-5555 (To date HP person coordinating the relationship--seeking a short term play) Greg Pyle Solution Control Manager Southeast Region Austin TX (#(512)-257-5735 (Pyle has been playing the business developer role but continues to defer leadership of the process to Gerry Cashiola) Daniel Morgridge Manager of Internet - E-Services long term alliances Austin TX #(512)-257-5736 (Interested in E-services/wireless longer term alliances) Bill Dwyer Chief Architect e-Services Solutions Cupertino CA #(408)-447-5240 (To date clearly the most knowledgeable person on HP's business propositions strong technical financial background to craft value propositions. Gerry Cashiola and Greg Pyle deferred to his judgement in the 11/16th meeting) Matt On November 10th GSS Business Development took HP through a tour of Enron's trading floor the gas control center and the peaking power plant unit center on the trading floor. This tour was one meeting amongst several held in October and November to provide HP a full overview of Enron's products and services and introduce them to appropriate contacts at Enron (EBS GSS buy side -- Peter Goebel). On November 16th GSS Business Development Patrick Tucker and Dale Clark outlined 3 possible EBS/HP focus areas -- connectivity storage and wireless. Three EBS action items were defined in that meeting: 1) HP was to provide an HP contact on connectivity (to date Gerry Cashiola has stalled on providing this). Sarah-Joy will continue to pursue this information and get a sense from Gerry Cashiola of what he means by short term opportunity. What is HP's time horizon for short term? 2) EBS and GSS/BD was to facilitate a conference call on Storage with Ravi to explore size and potential scope of opportunity (completed 12/8) 3) GSS/BD was to facilitate a conference call with Peter Goebel GSS IT Sourcing Portfolio Leader (set for 12/14) In conversations with you Jennifer Medcalf and myself this morning several decisions on forward-looking strategy with HP/EBS were confirmed: Gerry Cashiola has been unable to take control of the process. More importantly despite numerous visits to Enron in which he has had overviews of Enron's products and services met with Peter Goebel and his team on the GSS buy side and participated in an Experience Enron tour Gerry has been unable to define an HP business proposition. The coordination between Cashiola (short term initiative) Morgridge (long term 12-24 months) has remained unorganized. These initiatives need to be developed separately. Clearly the conversations with HP need to be elevated to a more senior level so EBS can work with HP decision makers who can move the relationship forward at a strategic level. As the relationship is developed at this strategic level shorter term opportunities will crop up along the way. But Gerry's short term plans will not be the focus of the EBS/HP relationship rather a by-product. To facilitate this process of elevating the relationship Jennifer Medcalf and I are following up with Bill Lovejoy and Greg Pyle. Lovejoy's boss is Dan Sytsma VP of HP's America's Central Region. In the conference call Thursday 12/14 with Peter Goebel and HP regarding wireless initiatives Peter will support the GSS/BD push for the HP/EBS initiative by reiterating the following two points: a) Enron is already an HP customer the onus is on HP to move forward on the process of building a strategic relationship (IBM and Lexmark are only some of the HP competitors who could push them out of the running) b) HP's ability to bring the right people to the table will influence HP's business relationship process with Enron Patrick Tucker and Dale Clark could build their relationship with Bill Dwyer Chief Architect e-Services Solutions (met at the meeting 11/16) in the near term. Perhaps plan a visit to Cupertino California to see Dwyer in person. We look forward to continuing close collaboration with your team on this and other opportunities. Sarah-Joy Hunter Enron Corporation Global Strategic Sourcing - Business Development #(713)-345-6541 What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: RE: Schoenemann Resume Body:: Presly Greetings from London. I picked up your resume from here and forwarded it to our corporate recruiter. Vince What should this email be categorized as? [/INST] Personal but in professional context <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: EBS/Blockbuster Local Media Body:: Strong work Laura! ----------------- What should this email be categorized as? [/INST] Personal but in professional context <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: <<Concur Expense Document>> - May2001ExpenseReport Body:: ----------------- What should this email be categorized as? [/INST] Logistic Arrangements <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: One more for Mark Metts Body:: Am I taking care of you or what?? ----------------- What should this email be categorized as? [/INST] Personal but in professional context <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: 3125A - meeting with Van der Walde, Hartsoe, Watkiss, per Lucy Marshall Body:: OK for you to join them late What should this email be categorized as? [/INST] Logistic Arrangements <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Deadline Today -- Draft Enron Comments on NERC Bill Body:: Attached are suggested comments on the draft NERC bill for which we were asked to provide comments by today. You will see that the response is a firm but polite -- no thanks. While I doubt NERC assumes that silence means support by their deadline today I would like to get something to them by COB if at all possible. (I will be on vacation tomorrow in any event). With apologies for the short turn around please call or e-mail your comments or OK this afternoon. John What should this email be categorized as? [/INST] Document editing/checking/collaboration <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Energy Issues Body:: Please see the following articles: AP Wires Thurs 3/22: Report: Power wholesalers overcharged California $5.= 5=20 billion Dow Jones Newswires Thurs 3/22: Reliant To Appeal Fed Judge Ruling To Sel= l=20 Pwr To Calif Sac Bee Thurs 3/22: Federal judge orders major power wholesaler to sell t= o=20 California San Jose Mercury News Thurs 3/22: State falling short on pacts that provi= de=20 low-cost energy Contra Costa Times Thurs 3/22: Crisis saps state surplus Sac Bee. Fri 3/23: Bill to pay small energy firms stalls Sac Bee Fri. 3/23: House panel ends energy hearings -- will it step in? Sac Bee Fri 3/23: Dan Walters: Crisis deepens: politicos panic San Diego Union Fri. 3/23: Report says power wholesalers overcharged=20 state $6 billion San Diego Union Fri 3/23: Disappearing state surplus sparks alarm San Diego Union Fri. 3/23: Outages darken economic outlook in state so= me=20 say San Diego Union Fri. 3/23: Out-of-state generators question power=20 regulators' authority San Diego Union Fri. 3/23: Allegheny Energy makes big California=20 connection LA Times Fri 3/23: Judge Frees Small Firm From Edison Contract SF Chron Fri 3/23: Lodi Defies Order for Blackouts=20 Utility tells PG&E to 'pay the bills' SF Chron Fri 3/23: Coming Down to the Wire=20 State legislators battle over alternative energy bills SF Chron Fri 3/23: Grid Operators Push to Prevent Overcharging=20 They say regulators must be aggressive to stop billing abuses=20 Mercury News Fri. 3/23: State's bill for energy could double this year Mercury News Fri. 3/23: Plan for alternate power plants stalls --- --- Report: Power wholesalers overcharged California $5.5 billion=20 DON THOMPSON Associated Press Writer Thursday March 22 2001=20 2001 Associated Press=20 (03-22) 11:41 PST SACRAMENTO Calif. (AP) -- Electricity wholesalers have= =20 overcharged California more than $5 billion since May by manipulating the= =20 energy market according to a report prepared for power grid managers.=20 The Independent System Operator will file the findings with federal=20 regulators and ask for a refund ISO spokesman Patrick Dorinson said.=20 The state auditor also said Thursday that the state's 1996 deregulation law= =20 encouraged both buyers and sellers of electricity to ``manipulate wholesale= =20 prices to their advantage'' by underestimating supply and demand.=20 The auditor's report lays out what it calls ``a complex combination'' of=20 deficiencies and misjudgments it says led to the state's power problems.=20 According to the ISO report five in-state power suppliers and 16 importers= =20 frequently offered electricity at prices higher than it cost them to produc= e=20 -- effectively withholding supplies -- or didn't bid at all when they were= =20 able to generate power.=20 ISO Director of Market Analysis Anjali Sheffrin presented the findings at a= =20 conference in Berkeley last week.=20 The companies have denied overcharging California and have said they expect= =20 the Federal Energy Regulatory Commission will determine their prices were= =20 justified.=20 The commission has recently stepped up scrutiny of power companies' behavio= r=20 during California's power crisis asking suppliers to justify $124 million = in=20 sales during the first two months of the year or refund the money. Critics= =20 claim thousands of additional questionable sales are not being challenged.= =20 California has been spending about $45 million a day -- $4.2 billion since= =20 January -- to purchase power for Pacific Gas and Electric Co. and Southern= =20 California Edison. Both utilities the state's largest have been cut off b= y=20 electricity wholesalers because their credit is almost worthless.=20 Edison and PG&E say they are nearly $14 billion in debt due to soaring=20 wholesale power costs. The state's deregulation law blocks them from=20 recovering the costs from customers.=20 State Controller Kathleen Connell said Wednesday that the state's=20 power-buying is gutting its budget surplus.=20 Since the state started making emergency power buys the surplus has fallen= =20 from $8.5 billion to about $3.2 billion she said.=20 Connell ordered an audit of the power buys saying Gov. Gray Davis is=20 withholding key financial information from her office and the Legislature.= =20 She said she would refuse to transfer $5.6 billion into a ``rainy day fund'= '=20 she said was set up to impress Wall Street as the state prepares to issue $= 10=20 billion in revenue bonds to cover its power buys.=20 Transferring the money would leave the state general fund $2.4 billion in= =20 debt Connell said.=20 Sandy Harrison spokesman for the state Department of Finance and Keely=20 Bosler of the Legislative Analyst's Office said such transfers are routin= e=20 and required by law.=20 ``The law says she has to do it. The law does not give her the power to=20 demand that kind of audit information'' Harrison said.=20 Davis spokesman Steve Maviglio said the administration has released the=20 financial information it can without jeopardizing negotiations for long-ter= m=20 power contracts with wholesalers.=20 Also Wednesday a federal judge ordered a major wholesaler Reliant Energy= =20 Services to continue selling power to California despite its fear that it= =20 will not be paid.=20 The ISO buys power from companies like Reliant on behalf of utilities in=20 attempts to fend off rolling blackouts like those that hit the state this= =20 week and during two days in January.=20 --- Reliant To Appeal Fed Judge Ruling To Sell Pwr To Calif 03/22/2001 Dow Jones Energy Service (Copyright (c) 2001 Dow Jones & Company Inc.) LOS ANGELES -(Dow Jones)- Reliant Energy Inc. (REI) said Thursday it will= =20 immediately file with the 9th Circuit Court of Appeals in San Francisco in= =20 response to a federal judge's ruling late Wednesday that the company contin= ue=20 selling power to California regardless of whether it is paid.=20 U.S. District Court Judge Frank Damrell granted California's Independent=20 System Operator which makes last minute power purchases in the spot market= =20 a preliminary injunction against Reliant saying Californians were at risk = of=20 irreparable harm if Reliant stopped selling power to the state. The ISO manager of the state's electricity grid said the judge's ruling= =20 will allow the agency to keep the lights on in California.=20 Reliant which is owed more than $300 million from the state's cash-strappe= d=20 utilities supplies California with about 3000 megawatts of electricity fr= om=20 power plants it owns in the state.=20 Reliant spokesman Richard Wheatley said the state Department of Water=20 Resources the agency that buys California's bulk power needs on behalf of= =20 PG&E Corp. (PCG) unit Pacific Gas & Electric Edison International (EIX) un= it=20 Southern California Edison and Sempra Energy (SRE) unit San Diego Gas &=20 Electric should back the ISO's last minute power purchases.=20 In a filing with the Securities and Commission Reliant said it is owed $10= 8=20 million by the DWR for last minute power purchases the ISO made during the= =20 six weeks prior to the agreement Reliant made with the DWR.=20 Damrell dismissed Reliant's claim saying he does not have the authority to= =20 force the DWR to pay for that power.=20 We're going to immediately appeal Judge Damrell's order Wheatley said.= =20 Clearly the judge understands the implications of his order. We are requir= ed=20 to do business with creditworthy entities. Unfortuantely the judge did not= =20 force the ISO to post a surety bond which would allowed us to do business= =20 with the ISO.=20 Gov. Gray Davis has said the state is not responsible for the last minute= =20 power purchases the ISO makes despite a law passed authorizing the DWR to= =20 buy power on behalf of the utilities.=20 Wheatley added that the company will also seek relief on the issue at the= =20 Federal Energy Regulatory Commission. Damrell's ruling remains in effect=20 until the Federal Energy Regulatory Commission rules on the matter.=20 Separately Wheatley said a short-term power supply contract that Reliant= =20 signed with the DWR expired Monday and the DWR has not renewed the contract= .=20 A spokesman for the DWR would not comment on the issue.=20 -By Jason Leopold Dow Jones Newswires 323-658-3874=20 [email protected] --- --- ----------------------- Federal judge orders major power wholesaler to sell to California Updated: March 21 2001 - 8:23 p.m.=20 A federal judge issued a preliminary injunction Wednesday ordering a major= =20 electricity wholesaler to continue selling to California despite its fear= =20 that it will not get paid.=20 U.S. District Judge Frank C. Damrell Jr. said Californians were at risk of= =20 irreparable harm if Reliant Energy Services stopped selling power to the=20 Independent System Operator which oversees the state's power grid. The ISO= =20 buys last-minute power on behalf of utilities to fill gaps in supply to try= =20 to fend off blackouts.=20 Damrell dismissed Reliant's attempt to force the state Department of Water= =20 Resources to back the ISO's purchases for the state's two biggest utilities= .=20 The state has been spending about $50 million a day on power for Pacific Ga= s=20 and Electric Co. and Southern California Edison both denied credit by=20 suppliers after amassing billions of dollars in debts. The judge said he had no authority to force the DWR to pay for that power.= =20 Gov. Gray Davis has said the state isn't responsible for purchasing the=20 costly last-minute power ISO buys for Edison and PG&E despite a law=20 authorizing state power purchases on the utilities' behalf.=20 ISO attorney Charles Robinson said the ruling gives ISO operators a tool t= o=20 assist them in keeping the lights on in California.=20 Had the decision gone the other way one could expect other generators to= =20 simply ignore emergency orders Robinson said.=20 Damrell's preliminary injunction will remain in effect until the Federal=20 Energy Regulatory Commission rules on the matter.=20 Damrell denied the ISO's request for preliminary injunctions against three= =20 other wholesalers Dynegy AES and Williams who agreed to continue selling= =20 to the ISO pending the FERC ruling.=20 Spokesmen for Reliant Dynegy AES and Williams were out of the office=20 Wednesday night and didn't immediately return calls from The Associated Pre= ss=20 seeking comment on the ruling.=20 The ISO went to court in February after a federal emergency order requiring= =20 the power sales expired. The judge then issued a temporary restraining orde= r=20 requiring the sales but dropped it after the suppliers agreed to continue= =20 sales to California pending his Wednesday ruling.=20 The ISO said it would lose about 3600 megawatts if the suppliers pulled ou= t=20 enough power for about 2.7 million households. One megawatt is enough for= =20 roughly 750 homes.=20 Grid officials said Reliant's share alone is about 3000 megawatts. Reliant= =20 said the amount at issue actually is less than a fourth of that because mo= st=20 of the power is committed under long-term contracts.=20 Reliant which provides about 9 percent of the state's power worries it=20 won't get paid due to the financial troubles of PG&E and Edison.=20 PG&E and Edison say that together they have lost about $13 billion since Ju= ne=20 due to soaring wholesale electricity costs that California's 1996=20 deregulation law bars them from passing onto customers.=20 At the same time the state has faced a tight electricity supply due in pa= rt=20 to California power plant shutdowns for maintenance and to a tight=20 hydroelectric supply in the Pacific Northwest.=20 Managers of the state power grid imposed rolling blackouts across the state= =20 Monday and Tuesday as supply fell short of demand. Wednesday cooling=20 temperatures and the completion of repairs at several power plants allowed= =20 the state to avoid blackouts. State Controller Kathleen Connell said Wednesday that the energy crunch als= o=20 imperils California's financial health. Connell said the state's power-buying on behalf of Edison and PG&E is is=20 gutting its budget surplus. Since the state started making emergency power= =20 buys in January the surplus has fallen from $8.5 billion to about $3.2=20 billion she said.=20 Connell ordered an audit of the state's power-buying saying Davis is=20 withholding key financial information from her office and the Legislature.= =20 She is refusing a request by Davis and the Legislature to transfer $5.6=20 billion into a rainy day fund she said was set up to impress Wall Street = as=20 the state prepares to issue $10 billion in revenue bonds to cover its=20 power-buying.=20 Transferring the money would leave the state general fund $2.4 billion in= =20 debt Connell said.=20 Sandy Harrison spokesman for the state Department of Finance and Keely=20 Bosler of the Legislative Analyst's Office said such transfers are routine= =20 and required by law.=20 They put the state's budget surplus at $5.6 billion.=20 The law says she has to do it. The law does not give her the power to dema= nd=20 that kind of audit information Harrison said.=20 He said the state's budget isn't in danger because it will be repaid with t= he=20 $10 billion in long-term debt.=20 Wells Fargo & Co. chief economist Sung Won Sohn said he sees little progres= s=20 in efforts to fix the state's power problems and end state electricity=20 purchases.=20 If we're going to pour money into a bottomless pit I would worry about th= e=20 state's finances he said. At some point we're going to run out of money.= The controller's criticism of fellow Democrat Davis won support from Assemb= ly=20 Republicans and Secretary of State Bill Jones a Republican considering=20 challenging Davis next year.=20 Jones said he wants to announce his own plan to solve the state's energy=20 woes but can't unless Davis releases more financial details.=20 Davis spokesman Steve Maviglio dismissed the criticism. Political grandstanding doesn't generate one more kilowatt of energy for= =20 California in this time of emergency he said.=20 Maviglio said the administration has released the financial information it= =20 can without jeopardizing negotiations for long-term power contracts with=20 wholesalers.=20 Also Wednesday a report by Davis' chief power negotiator appears to show= =20 that as much as 75 percent of the state's power purchases will have to be o= n=20 the expensive short-term market this summer said Sen. Debra Bowen D-Marin= a=20 del Rey chairwoman of the Senate Energy Committee.=20 The prices may be phenomenol she said particularly given predicted=20 hydroelectric shortages due to drought in the Pacific Northwest.=20 The report by David Freeman who is negotiating the state's long-term power= =20 contracts shows California has finalized 19 contracts and has 25 agreement= s=20 in principle. Freeman said DWR is continuing to negotiate other contracts. Bowen said FERC should impose short-term price caps or let generators to=20 charge enough to make a reasonable profit or we could be subject to enormo= us=20 price-gouging this summer.=20 -- Associated Press --- State falling short on pacts that provide low-cost energy=20 Published Thursday March 22 2001 in the San Jose Mercury News=20 BY CHRIS O'BRIEN AND JOHN WOOLFOLK=20 Mercury News=20 The state has signed low-cost contracts for just a third of the energy it= =20 needs this year raising the prospect that California could be forced to bu= y=20 much of its electricity this summer on the expensive spot market.=20 A spokesman for Gov. Gray Davis conceded Wednesday that the state will be i= n=20 trouble without more contracts but insisted California will meet its needs= =20 through conservation and additional long-term deals for cheap electricity.= =20 The state according to a report released Wednesday has fallen far short o= f=20 the governor's goal of filling almost all its electricity needs through suc= h=20 deals. In fact the state has lined up contracts for about half the amount= =20 Davis had projected earlier this month.=20 If the state has to rely heavily on the volatile spot market where the pri= ce=20 of electricity this summer could reach five times the state's contract pric= e=20 pressure could mount to raise the cap on the electricity rates consumers pa= y.=20 But Steven Maviglio the governor's spokesman said ``The governor has sai= d=20 he's committed to work this in the existing rate structure so that's the= =20 plan.''=20 In the report sent to state lawmakers the state Department of Water=20 Resources indicated that it had secured just more than 20 million=20 megawatt-hours for this year leaving it far short of the 60 million=20 megawatt-hours needed.=20 ``This is just a progress report'' Maviglio said. ``They did all this in= =20 three weeks which is pretty amazing when you think about it and we have a= =20 lot more to do.''=20 The state got into the power buying business in January supplying it to th= e=20 state's nearly bankrupt utilities.=20 The state negotiated long-term contracts with generators to supply that pow= er=20 at a reduced rate. Based on the report the state will pay an average of $6= 8=20 per megawatt-hour over the next 10 years -- significantly less than in=20 December when prices spiked higher than $300 per megawatt-hour but not as l= ow=20 as the $55 Davis hoped to reach.=20 Most of this power however won't be delivered until 2004. From 2004 to=20 2006 the Department of Water Resources estimates it has enough power unde= r=20 contract. Until then the amount falls short.=20 In 2001 it appears the state has about one-third of the power it needs. Th= e=20 gap closes to about half in 2002 and two-thirds in 2003.=20 At a news conference in Los Angeles two weeks ago Davis said the state wou= ld=20 have to buy only 30 to 45 percent of the power it needs this summer on the= =20 open market.=20 At the time critics said with only two-thirds of the power under contract= a=20 rate increase was almost inevitable. Even Davis' chief negotiator S. David= =20 Freeman offered a bleak assessment for the summer saying that all availab= le=20 electricity has already been sold.=20 ``We'll be subject to extremely high prices'' said Frank Wolak a Stanford= =20 professor who sits on a market committee for the Independent System Operato= r=20 the agency that runs the state power grid.=20 Wolak said there are two main hopes for avoiding a price increase this=20 summer: Federal officials could cap the wholesale price a step they've=20 resisted or Californians can conserve an unprecedented amount of power. --- --- ----------------------- Crisis saps state surplus POWER CRISIS=20 Controller moves to block a transfer of funds saying the $8.5 billion=20 surplus has been cut more than half since January=20 By Mike Taugher TIMES STAFF WRITER=20 The energy crisis has bled California's once-touted budget surplus by more= =20 than half since taxpayers began buying electricity two months ago leading = a=20 top state finance official Wednesday to order an audit of the power purchas= es=20 and block Gov. Gray Davis' plan to transfer funds into a reserve account.= =20 A booming economy last year produced a budget surplus that totaled $8.5=20 billion in January. But that figure now stands at about $3.2 billion=20 according to Controller Kathleen Connell.=20 We started this year with a generous budget surplus Connell said in a=20 statement announcing her decision to block what Davis administration=20 officials described as a routine transfer of surplus money. The energy=20 crisis has taken much of that away and this transfer on top of the=20 electricity purchases would put the fund at risk.=20 Meanwhile the Davis administration released a report by David Freeman the= =20 governor's chief negotiator on power purchases on the progress of executin= g=20 long-term agreements meant to stabilize the power buys.=20 According to the report only about 40 percent of the electricity needed fr= om=20 the open market this year has been lined up. That means the state could be= =20 forced to continue buying a substantial amount of power on the highly=20 expensive spot market and further drain its coffers.=20 And a key regulatory panel is scheduled next week to issue a ruling that=20 would determine how quickly state funds will be replenished when it decides= =20 what portion of electric bill payments should be allocated to the state=20 treasury a decision that could include a rate increase to fully repay=20 taxpayers without further crippling the state's two largest electric=20 utilities.=20 The Public Utilities Commission also will consider whether it will force th= e=20 utilities to pay alternative energy producers whose shutdowns this week=20 contributed to blackouts.=20 Connell's action underscores a growing nervousness over the sheer volume of= =20 money that is being poured into energy buys despite the fact that state=20 officials plan to replenish the treasury with up to $10 billion in loans th= at=20 will be repaid by electricity consumers.=20 The state has committed to spending $4.2 billion to date to keep lights on= =20 since taxpayers were forced in mid-January to take over electricity buys fr= om=20 the financially crippled utilities Pacific Gas & Electric Co. and Southern= =20 California Edison. Tax money is going out at a clip of about $50 million a= =20 day.=20 High prices already have brought PG&E and Edison to the brink of bankruptcy= =20 and now the state's surplus is at risk according to Connell.=20 In addition to requesting an audit and announcing her intention to delay th= e=20 transfer to the reserve account Connell said she wanted the administration= =20 to send her office more information about the electricity purchases.=20 Davis' representatives questioned Connell's authority in trying to block th= e=20 funds transfer which they called a routine accounting procedure and accus= ed=20 her of making political hay.=20 It is not helpful to the taxpayers or ratepayers or the people who just wa= nt=20 to keep the lights on it isn't helpful to have the situation muddied like= =20 this said Sandy Harrison a Finance Department spokesperson. We're sorry= =20 it came up in this manner.=20 Connell and the administration have butted heads in recent weeks. The=20 controller wants to post details of the state's electricity purchases on he= r=20 Web site a plan that have been delayed under pressure from Davis because o= f=20 the governor's concerns that releasing those details will allow power=20 generators and traders to sell at higher prices.=20 Harrison said administration officials believe Connell lacks the authority= =20 either to block the funds transfer to a reserve account or to audit the sta= te=20 water resources department.=20 Two days of widespread blackouts this week show how vulnerable the power gr= id=20 is to financial glitches. Although several factors combined to produce the= =20 blackouts state power officials say the outages could have been avoided if= =20 the utilities were paying their bills to alternative energy producers.=20 Many of those producers including clean-burning natural gas power plants= =20 wind solar and geothermal energy developers shut down enough production t= o=20 spell the difference between grid reliability and blackouts Monday and=20 Tuesday.=20 Davis called the utilities' failure to pay bills to those producers known = as=20 qualifying facilities immoral. The QFs were either unable to buy gas fro= m=20 their suppliers or were frustrated with the utilities' failure to pay them.= =20 The utilities hoarded billions of dollars since November without paying an= y=20 money out said Davis spokesman Steve Maviglio. They've got the money --= =20 we're pulling the trigger to make them pay it.=20 The utilities however say they are doing all they can to conserve enough= =20 cash to continue operating. Together they owe the QFs about $1.5 billion.= =20 Next week the PUC is scheduled to consider whether to force the utilities = to=20 heed Davis' demand to pay the QFs and it might also decide how much of=20 ratepayers' bill payments will be used to refund taxpayers for power buys.= =20 PG&E says that under a formula proposed by the administration the water=20 resources department would receive about 40 percent of the money collected= =20 from ratepayers for power purchases.=20 The rest of that money about $240 million would have to be divided among= =20 QFs existing power contracts operating PG&E's nuclear and hydroelectric= =20 plants and what hour-by-hour purchases the utility still must make on the= =20 spot market according to PG&E spokesman John Nelson.=20 There isn't enough to do that he said.=20 That is making it increasingly likely that electric bills will be hiked=20 according to a growing chorus of officials and experts.=20 Unless rates are raised Nelson said the only entity that can absorb a lac= k=20 of payment or a partial payment is the state treasury. Cutting off any othe= rs=20 will lead to electricity becoming unavailable and more blackouts he said.= =20 If they do it under existing rates -- given that the existing pool of mone= y=20 is not enough -- who doesn't get paid or who gets a partial payment? Nelso= n=20 said. What's the only entity left with wiggle room? The state.=20 Rate hikes are also a sticking point in negotiations to bail out the=20 utilities through purchase of their transmission lines and other assets=20 Maviglio said.=20 They want rate increases of significant magnitude and we're not going=20 there he said.=20 WE CAN TRIM STORY HERE IF NECESSARY BUT KEEP TAGLINES AT BOTTOM=20 About one-third the electricity needed by the customers of California's thr= ee=20 major utility companies is produced by the companies themselves one-third= =20 comes from alternative producers who use environmentally friendly technique= s=20 and one-third is bought on the open market.=20 The state stepped in to buy the one-third needed from the open market after= =20 the utility companies ran out of cash and credit in January to make the=20 purchases themselves.=20 But that electricity has proven to be enormously expensive and Davis has= =20 planned to lower those prices by committing to long-term purchases.=20 Freeman's report on the progress of those long-term purchases dated March = 15=20 but released this week said the state has finalized 19 contracts with seve= n=20 suppliers and reached 25 additional agreements.=20 Mike Taugher covers the environment and energy. Reach him at 925-943-8324 o= r=20 [email protected].=20 Staff writer Andrew LaMar contributed to this story. --- --- ----------------------- Bill to pay small energy firms stalls By Kevin Yamamura Dale Kasler and Jim Sanders Bee Staff Writers (Published March 23 2001)=20 A quickly melded proposal that would assure payments for alternative energy= =20 suppliers whose money woes contributed to power blackouts this week stalled= =20 Thursday in a divided Legislature.=20 The state Senate passed the bill AB 8x but with Republicans balking it w= as=20 rejected in the Assembly along party lines. Assembly leaders said they may= =20 try again today.=20 For most of Thursday lawmakers scrutinized legislation they had overhauled= =20 the night before to include Gov. Gray Davis' plan to force utilities to pay= =20 solar wind and small gas-fired suppliers. Such providers called qualifie= d=20 facilities or QFs provide more than 20 percent of California's=20 electricity and their shutdowns were partly to blame for rolling blackouts= =20 Monday and Tuesday.=20 Under the Democratic governor's plan the state Public Utilities Commission= =20 would determine prices at which alternative generators may sell power but= =20 legislation is needed to authorize the PUC action.=20 Lawmakers faced time pressures Thursday. They wanted to pass the bill quick= ly=20 so the PUC could act next week and legislators could embark Monday on an=20 annual three-day lobbying trip in Washington D.C.=20 Assembly Speaker Robert Hertzberg D-Sherman Oaks said the Republicans'=20 rejection of AB 8x could jeopardize more than $4 billion the state has spen= t=20 or allocated for electricity during the energy crisis.=20 Hertzberg said producers of alternative energy which are owed more than $1= =20 billion have threatened to drag debt-ridden utilities into involuntary=20 bankruptcy if the Legislature failed to pass the measure.=20 They said it and I believe it Hertzberg said. If such bankruptcies occu= r=20 he added the state with its multibillion-dollar debt would become just=20 another creditor in a pile of creditors.=20 But Assembly Republican leader Bill Campbell of Villa Park said the=20 finger-pointing is unfair. Passage of AB 8x would not necessarily prevent= =20 bankruptcies he said.=20 One alternative energy provider won a crucial court ruling Thursday that=20 staved off at least for a while threats by some creditors to haul one or= =20 both big utilities into bankruptcy court for nonpayment of bills.=20 CalEnergy Co. Inc. won the right to sell its geothermal power which was=20 contracted to Southern California Edison on the open market. CalEnergy sai= d=20 it is owed $45 million by Edison.=20 If the Imperial County judge hadn't ruled in CalEnergy's favor the company= =20 and seven other QFs were fully prepared to file an involuntary bankruptcy= =20 petition against Edison this morning said David Sokol chief executive of= =20 CalEnergy's parent MidAmerican Energy Holdings Co. of Des Moines Iowa.=20 That is currently off the table.=20 An involuntary bankruptcy proceeding would take California's energy crisis= =20 into uncharted territory although a bankruptcy judge would have the leeway= =20 to reject the filing.=20 Freed from its contract with Edison CalEnergy will move to sell its=20 electricity to people who will pay for it Sokol said.=20 Besides calming the bankruptcy movement temporarily the ruling also could= =20 prompt other alternative energy providers -- hundreds of which have shut do= wn=20 because of nonpayment by Edison and Pacific Gas and Electric Co. -- to foll= ow=20 CalEnergy's example and find other buyers for their electricity said Gary= =20 Ackerman of the Western Power Trading Forum an association of generators.= =20 Assembly Republicans said they felt the Senate's decision to package three= =20 important energy issues into a single bill was an attempt to ramrod=20 legislation through both houses.=20 We have to stand and say no Campbell said during floor debate.=20 Besides determining alternative generator payments the bill would change a= n=20 earlier law by capping the value of bonds the state may sell for power=20 purchases at $10 billion. It also would extend to large businesses an=20 existing rate cap in the San Diego Gas and Electric Co. service area.=20 And it would earmark a portion of rates paid by utility customers to fund t= he=20 state's ongoing power purchases. Within a week the state will have spent= =20 $4.2 billion on power since January.=20 Without the bill some legislators fear Pacific Gas and Electric and=20 Southern California Edison would be reimbursed before the state.=20 They have got (some) gall to go to the PUC and say they're going to go to= =20 court to keep our money -- to keep our money to pay off their creditors= =20 said Senate President Pro Tem John Burton D-San Francisco.=20 Most of the bill's controversy however centered on how the PUC would trea= t=20 gas-fired alternative generators.=20 The commission issued a revised draft decision Wednesday that would impose= =20 prices for qualifying facilities at $79 a megawatt-hour for five-year=20 contracts or $69 a megawatt-hour for 10 years.=20 But those producers that use natural gas -- representing about two-thirds o= f=20 the alternative energy providers in California -- spent Thursday arguing th= at=20 Davis' plan to rescue them would all but guarantee that they would go out o= f=20 business instead.=20 The plan -- ordering Edison and PG&E to pay them a fixed price for their=20 power -- would set rates well below the cost of natural gas they said.=20 Democratic lawmakers tried to assure such producers that the PUC would set= =20 prices that make business sense even obtaining a letter to that effect fro= m=20 Loretta Lynch who heads the commission.=20 Davis has vowed to fine Edison and PG&E if they don't pay alternative=20 producers for future deliveries. But Sokol said his company isn't convinced= =20 that Edison will pay.=20 Calling Edison a confrontive in-your-face nasty organization Sokol sai= d=20 the utility was sitting on $2 billion and not paying its bills. Edison i= n=20 a Securities and Exchange Commission filing Thursday said its debts outwei= gh=20 its cash reserves by $722 million.=20 The Senate sent the Assembly two other bills that deal specifically with=20 supply and demand. The first SB 5x would spend about $1 billion on energy= =20 conservation and low-income assistance programs. The other SB 28x would= =20 streamline siting procedures for power plant construction.=20 In separate energy-related matters Thursday the Assembly approved:=20 AB 21x which would allow businesses industries or other electrical=20 customers to negotiate private contracts with energy providers.=20 Nine energy bills designed to generate or save 665 megawatts of electricity= =20 -- including 345 megawatts this summer. One megawatt is enough electricity = to=20 light about 1000 homes.=20 The state put power emergencies behind it after dropping out of a Stage 1= =20 alert late Wednesday. The California Independent System Operator which=20 manages the state's power transmission grid was predicting no further aler= ts=20 this week. It expected cooling temperatures and a regular dropoff in=20 electricity use on Fridays to lessen demand at the same time that more pow= er=20 plants were returning to service.=20 Bee staff writer Carrie Peyton contributed to this report.=20 --- House panel ends energy hearings -- will it step in? By David Whitney Bee Washington Bureau (Published March 23 2001)=20 WASHINGTON -- A key House panel wrapped up a series of hearings on the=20 California electricity crisis Thursday and now will decide whether to come = to=20 the state's aid with legislation.=20 But the panel's Texas chairman made clear that West Coast price controls=20 won't be on the table.=20 Caps will not be in anything I am submitting said Rep. Joe Barton=20 chairman of the House Energy and Commerce Committee's energy and air qualit= y=20 subcommittee.=20 Some form of federal controls to hold down escalating wholesale prices this= =20 summer because of power shortages has been the most frequent appeal of=20 witnesses who testified before the panel during roughly 30 hours of hearing= s=20 over five days.=20 Such controls have been sought by the governors of California Oregon and= =20 Washington. As power shortages are forecast for other regions states like= =20 New York also have appealed for temporary price controls to halt gouging.= =20 But the Federal Energy Regulatory Commission which is responsible for=20 enforcing reasonable wholesale rates under the Federal Power Act has refus= ed=20 to impose them and the Bush administration is bolstering that decision by= =20 opposing any legislation that would compel such action.=20 Barton in a brief hallway interview declined to say what other legislativ= e=20 remedies he might propose to address the worsening California situation.=20 He said he expects to submit a list of ideas to the White House today and= =20 after receiving comment on it sit down with other committee Republicans an= d=20 Democrats next week to see if any legislation is in order.=20 If we are going to do anything to help California or the West this summer= =20 we have to make it law within the next month or six weeks Barton said.=20 Even the panel's senior Democrat Virginia Rep. Rick Boucher was urging a= =20 careful and deliberate approach to the California crisis which he said w= as=20 largely of the state's own making.=20 There are steps Congress might take to provide some help to the West such = as=20 more money for conservation and relaxed federal regulation of air quality= =20 standards. That would permit older more polluting generators to operate=20 through a long hot summer when electricity demand could exceed supply by= =20 about 3000 megawatts roughly the amount needed to power 3 million homes.= =20 But Alan Lloyd chairman of the California Air Resources Board said power= =20 production already is being maximized without sacrificing air quality.=20 Simply put no essential electricity generation has been curtailed due to= =20 air emission limitations he said. California's programs to protect publi= c=20 health are not major factors in the electricity shortages experienced to=20 date.=20 The concern is that as shortages turn into more rolling blackouts wholesal= e=20 prices will jump even higher and steadily bleed the economies of California= =20 and the West Coast.=20 William L. Massey the lone member of the energy regulatory commission who= =20 supports price controls said at a Tuesday hearing that without them the We= st=20 Coast faces economic catastrophe this summer.=20 It was evident from the comments of some Republicans that they think their= =20 party could capitalize politically from a difficult summer.=20 If they had a bad summer it could show up in the polls said Rep. Charli= e=20 Norwood R-Ga. And sometimes that's not a bad idea.=20 One of the most dramatic exchanges during the weeklong hearings came Thursd= ay=20 with S. David Freeman the former general manager of the Sacramento Municip= al=20 Utility District who now heads the Los Angeles Department of Water and Powe= r.=20 He recently was named Gov. Gray Davis' chief negotiator with power generato= rs=20 for long-term contracts to stabilize future deliveries.=20 Don't feel sorry for California Freeman said. We're going to come out o= f=20 this stronger than ever.=20 But Freeman said it will be a year or two before all the fixes are in place= =20 and in the meantime the region desperately needs Congress' help to force th= e=20 FERC into controlling wholesale prices which witnesses said are likely to= =20 rise from $7 billion last year to as much as $70 billion or more this year.= =20 We recognize that the current administration and various legislators have= =20 their own opinion as to the California situation Freeman said. But my=20 personal plea is that if the federal government is not going to help us th= e=20 least it should do is refrain from legislation that attempts to tell us wha= t=20 to do.=20 Barton perked up at that idea.=20 Leave California alone huh? Barton said. That might be a good motto.= =20 --- --------------------- Dan Walters: Crisis deepens: politicos panic (Published March 23 2001)=20 That choking sound you hear is California's political class shifting into= =20 near-panic mode as it realizes that the energy crisis is on the verge of=20 becoming a full-scale meltdown with utilities forced into bankruptcy and= =20 consumers hammered by severe and prolonged power blackouts and soaring=20 electricity bills.=20 The Legislature which had been content to allow Gov. Gray Davis to handle= =20 the crisis on his own suddenly came to life Thursday jolted by this week'= s=20 unexpected rolling blackouts and threats by creditors to force the utilitie= s=20 into bankruptcy court. Lawmakers quickly fashioned a basketful of legislati= on=20 aimed -- or so they hope -- at increasing power supplies promoting=20 conservation and relieving the financial pressure on utilities and=20 electricity generators. But it may be too little too late -- and Davis and= =20 other politicians are already pointing fingers of blame aware that a=20 political price will be paid if the apocalypse strikes.=20 While Davis chants his mantra that he inherited a fatally flawed utility=20 deregulation scheme from predecessor Pete Wilson Republicans are blaming= =20 Davis for moving too slowly after the crisis first surfaced last summer an= d=20 even some of Davis' fellow Democrats are distancing themselves from the=20 governor.=20 Deregulation was a product of a Republican governor a Republican author a= nd=20 a Republican PUC (Public Utilities Commission) that was unduly impatient= =20 Davis said at one point this week as the Capitol buzzed with private=20 negotiations and public posturing.=20 A day later however state Controller Kathleen Connell a Democrat issued= a=20 warning that Davis' power purchases running at $50 million a day had=20 already drawn down state budget reserves by nearly two-thirds and she=20 refused to authorize additional transfers. It was a direct shot by Connell = at=20 Davis an old rival and came just a day after the governor had endorsed a= =20 Connell foe Antonio Villaraigosa in the duel for mayor of Los Angeles.=20 Other Democrats didn't join Connell's direct challenge to Davis but there= =20 is nevertheless a growing concern among Democratic legislators that the= =20 power purchases are costing many billions of dollars more than the governor= =20 had projected and could place the state budget in jeopardy. They're nervous= =20 because Davis has refused to reveal even to legislators exactly how much= =20 power the state is buying each day and how much it is paying.=20 From the few details that have been disclosed it's clear that the state is= =20 spending about $1.5 billion a month which would wipe out the state's=20 reserves by midsummer. It's also becoming increasingly clear that Davis=20 probably can't make good on his promise to avoid major consumer rate=20 increases unless the state is willing to plunge deeply and semi-permanentl= y=20 into debt to underwrite wholesale costs or unless federal authorities orde= r=20 huge refunds from power suppliers.=20 Rates in areas served by private utilities have risen only slightly while t= he=20 costs first to utilities and later to the state soared. Data from the=20 administration and utilities when collated indicate that the state is in= =20 line to collect just 20 cents for every dollar it's spending on power=20 purchases and the gap will increase as summer heat drives up demand.=20 Privately some economists say that private utility rates will have to rise= =20 33 percent to 50 percent to cover costs of current power supplies plus=20 utilities' past debts to generators and the state's purchase of the=20 utilities' transmission system if that deal is made final.=20 It's ultimately going to break down and the ratepayer is going to pay for= =20 it one way or the other Republican Sen. Jim Battin said during one of=20 Thursday's many committee hearings on utility legislation. No one disagreed= =20 with him.=20 DAN WALTERS' column appears daily except Saturday. Mail: P.O. Box 15779= =20 Sacramento CA 95852 phone (916) 321-1195 fax: (781) 846-8350 E-mail: [email protected] Recent columns: --- Report says power wholesalers overcharged state $6 billion=20 By Don Thompson ASSOCIATED PRESS=20 March 22 2001=20 SACRAMENTO =01) Electricity wholesalers have overcharged California more th= an=20 $6.2 billion by manipulating the energy market according to a report by an= =20 economist working for power grid managers.=20 The Independent System Operator planned to file the findings with federal= =20 regulators Thursday and ask for a refund said ISO spokesman Patrick=20 Dorinson.=20 In a related development the state auditor said Thursday that the state's= =20 1996 deregulation law encouraged both buyers and sellers of electricity to= =20 manipulate wholesale prices to their advantage by underestimating both=20 supply and demand.=20 Disappearing state surplus sparks alarm=20 Outages darken economic outlook in state some say=20 Out-of-state generators question power regulators' authority=20 Allegheny Energy makes big California connection=20 Enron stock slides despite earnings reassurance=20 California's electricity crisis at-a-glance=20 ?=20 The auditor's report lays out what it calls a complex combination of=20 deficiencies and misjudgments it says led to the state's power problems.=20 The ISO's filing came a day after the state controller complained that a=20 relentless energy crisis is jeopardizing California's financial future.=20 Since May the companies manipulated the market by bidding at excessive=20 prices effectively withholding supplies or by not bidding at all when they= =20 had generation capability available according to the ISO study.=20 ISO Director of Market Analysis Anjali Sheffrin presented the findings at a= n=20 energy conference at the University of California Berkeley last week.=20 The companies have denied overcharging California and have said they expect= =20 the Federal Energy Regulatory Commission will determine their prices were= =20 justified.=20 In a burst of activity after weeks of delay both houses of the Legislature= =20 approved bills Thursday designed to ease the energy crisis.=20 The state Senate approved measures to encourage energy conservation and spe= ed=20 up power plant construction.=20 Topping that the Assembly sent the Senate 14 energy-related bills includi= ng=20 $455 million in loans and grants to encourage energy efficiency and=20 conservation and alternative energy projects by this summer.=20 One of the Assembly bills would require new energy plants approved by the= =20 state to sell their power within California before they offer it to other= =20 states.=20 The (California) Energy Commission says for every day we delay this bill= =20 there are 20 megawatts that could be saved that we're not saving said sta= te=20 Sen. Byron Sher D-Stanford as senators voted 28-10 to send his conservati= on=20 measure to the Assembly.=20 Senators also approved another Sher bill speeding up the siting of power=20 plants. It went to the Assembly on a 37-1 vote.=20 Meanwhile a federal judge issued a preliminary injunction Wednesday orderi= ng=20 one of the companies named in the ISO filing Reliant Energy Services to= =20 continue selling to California despite its fear that it will not be paid.= =20 U.S. District Judge Frank C. Damrell Jr. said Californians were at risk of= =20 irreparable harm if Reliant stopped selling power to the ISO which buys at= =20 the last minute on behalf of utilities to bolster supplies and try to fend= =20 off blackouts.=20 Such blackouts struck the state twice this week shutting off power to=20 hundreds of thousands of people from San Diego to Oregon snarling traffic= =20 and shutting down businesses.=20 The state remained free of any power alerts Thursday morning as power=20 reserves stayed above 7 percent.=20 Damrell dismissed Reliant's attempt to force the state Department of Water= =20 Resources to back the ISO's purchases for the state's two biggest utilities= =20 Southern California Edison and Pacific Gas and Electric Co.=20 The judge said he had no authority to force the DWR to pay for that power.= =20 The utilities have been denied credit after amassing billions of dollars in= =20 debt paying high prices for power that the state's energy deregulation law= =20 prevents them from passing on to consumers.=20 Gov. Gray Davis has said the state isn't responsible for purchasing the=20 costly last-minute power the ISO buys for Edison and PG&E despite a law=20 authorizing state power purchases on the utilities' behalf.=20 ISO attorney Charles Robinson said the ruling gives ISO operators a tool t= o=20 assist them in keeping the lights on in California.=20 Had the decision gone the other way one could expect other generators to= =20 simply ignore emergency orders Robinson said.=20 Damrell's preliminary injunction will remain in effect until the Federal=20 Energy Regulatory Commission rules on the matter.=20 In another development Wednesday state Controller Kathleen Connell=20 complained that the energy crunch is imperiling California's financial=20 health.=20 Connell said the state's power buying on behalf of Edison and PG&E is gutti= ng=20 its budget surplus. Since the state started making emergency power buys in= =20 January the surplus has fallen from $8.5 billion to about $3.2 billion sh= e=20 said.=20 Connell ordered an audit of the state's power buying saying Davis is=20 withholding key financial information from her office and the Legislature.= =20 She is also refusing a request by Davis and the Legislature to transfer $5.= 6=20 billion into a rainy day fund she said was set up to impress Wall Street = as=20 the state prepares to issue $10 billion in revenue bonds to cover its power= =20 buying.=20 Transferring the money would leave the state general fund $2.4 billion in= =20 debt Connell said.=20 Sandy Harrison spokesman for the state Department of Finance and Keely=20 Bosler of the Legislative Analyst's Office said such transfers are routine= =20 and required by law.=20 They put the state's budget surplus at $5.6 billion.=20 Davis spokesman Steve Maviglio dismissed the criticism.=20 Political grandstanding doesn't generate one more kilowatt of energy for= =20 California in this time of emergency he said.=20 Connell is a candidate for mayor of Los Angeles in next month's election.= =20 The ISO study meanwhile covered five major in-state power suppliers =01)= =20 Reliant Dynegy Williams/AES Duke Energy and Mirant as well as 16 power= =20 importers. All deliver power to customers of Edison PG&E and San Diego Gas= &=20 Electric Co. the state's three largest investor-owned utilities.=20 All overcharged but some excessively and some by moderate amounts said= =20 ISO's Sheffrin.=20 According to the report the overcharging took place beginning last May wh= en=20 the energy crisis began and continued through last month.=20 During that time according to the report energy suppliers commonly offere= d=20 their electricity at twice the amount it cost them to produce.=20 FERC member William L. Massey said he wasn't shocked to hear the amount=20 overcharged added up to more than $5 billion.=20 Prices over the past 10 months in California have greatly exceeded the=20 federal standards of just and reasonable prices and I think they have=20 exceeded the standards by possibly billions of dollars he said.=20 Chuck Griffin spokesman for Atlanta-based Mirant said the company would=20 justify their charges to FERC officials.=20 I think we're missing sometimes just how basic the problem is in Californi= a.=20 Supply and demand are out of whack and some basic rules of economics kick i= n=20 when that happens he said.=20 --- ------------- Disappearing state surplus sparks alarm=20 Controller puts hold on transfer of $5.6 billion to reserve funds By Karen Kucher and Ed Mendel=20 UNION-TRIBUNE STAFF WRITERS=20 March 22 2001=20 The state's general fund surplus has dropped to $3.2 billion from $8.5=20 billion since January largely because California's power purchases are=20 devouring the money state controller Kathleen Connell said yesterday.=20 Connell said she wants to see more documentation about state power spending= =20 before approving the transfer of $5.6 billion from the general fund to a=20 special reserve fund requested by Gov. Gray Davis.=20 Connell said the state would have to borrow $2.4 billion to cover the=20 transfer.=20 Report says power wholesalers overcharged California $5.5 billion=20 Outages darken economic outlook in state some say=20 Out-of-state generators question power regulators' authority=20 Allegheny Energy makes big California connection=20 Enron stock slides despite earnings reassurance=20 California's electricity crisis at-a-glance=20 ?=20 We started this year with a generous budget surplus. The energy crisis has= =20 taken much of that away and this transfer on top of the electricity=20 purchases would put the (general) fund at risk Connell said in a statemen= t.=20 Her action came on a day when state power supplies improved. After two days= =20 of forced outages this week no rolling blackouts were ordered yesterday.= =20 Several power plants came back on line and imports from the Pacific Northwe= st=20 provided enough electricity to meet demand yesterday said Stephanie=20 McCorkle a spokeswoman with the California Independent System Operator=20 which manages most of the state's power grid.=20 Gradually more (electricity) generation comes on every day McCorkle said= .=20 By Monday we should see somewhere around 2200 megawatts back in service= =20 that was not on this Monday. That's if no other generation falls off.=20 Meanwhile Connell's move took some by surprise.=20 A spokesman for the state Department of Finance said Connell is denying a= =20 routine transfer that is required by law. It was just a routine accounting= =20 measure that we didn't anticipate becoming controversial Sandy Harrison= =20 said.=20 Connell announced the denial of the transfer a day after Davis endorsed one= =20 of her opponents former Assembly Speaker Antonio Villaraigosa in the race= =20 for Los Angeles mayor.=20 Connell who monitors California's cash flow said she was deeply concerne= d=20 about putting the state's general fund in a deficit situation in light of t= he=20 energy crisis.=20 About two months ago the state began spending about $50 million a day to b= uy=20 power after Pacific Gas and Electric and Southern California Edison nearly= =20 went bankrupt. It is also purchasing power for customers of San Diego Gas a= nd=20 Electric.=20 The Davis administration said earlier this week it soon will begin spending= =20 an additional $500 million on power purchases bringing the total to $4.2= =20 billion.=20 As that staggering sum continues to grow the state won a court battle with= =20 an electricity supplier yesterday. A federal judge in Sacramento sided with= =20 the state and ordered the wholesaler to continue selling to California=20 despite its fear that it will not get paid.=20 Judge Frank C. Damrell Jr. said Californians were at risk of irreparable ha= rm=20 if Reliant Energy Services stopped selling power to the Independent System= =20 Operator. The ISO acquires last-minute power on behalf of utilities to fill= =20 gaps in supply to try to fend off blackouts.=20 Damrell dismissed Reliant's attempt to force the state Department of Water= =20 Resources to back the ISO's purchases for the state's two biggest utilities= .=20 The judge said he had no authority to force the DWR to pay for the power.= =20 Davis has said the state isn't responsible for purchasing the costly=20 last-minute power the ISO buys for Edison and PG&E despite a law authorizi= ng=20 state power purchases on the utilities' behalf.=20 Meanwhile those who manage the power grid say the forecast for power=20 supplies this week looks good although conditions can change quickly.=20 ISO managers continue to stress the importance of conservation. Utility=20 customers across the state conserved about 900 megawatts of power Tuesday= =20 which kept blackouts from being ordered that night.=20 As the power crisis worsened this week ISO managers wished aloud that they= =20 still could rely on business customers to shut down in exchange for lower= =20 energy rates.=20 Such interruptible customers saved as much as 2100 megawatts last spring= =20 a figure that dropped to about 1700 last summer and 1400 at the end of th= e=20 year. But in January the state Public Utilities Commission told utilities= =20 they could no longer impose fines on business customers who refuse to shut= =20 down when asked.=20 ISO managers realize the program was harming businesses with frequent=20 interruptions of service -- but they still miss having that option McCorkl= e=20 said.=20 It would have made an enormous difference but at the same time we=20 understand the impact it was having on businesses McCorkle said. --- -------------- Outages darken economic outlook in state some say=20 By Dean Calbreath? UNION-TRIBUNE STAFF WRITER=20 March 22 2001=20 Until this week the San Diego Regional Chamber of Commerce was predicting= =20 that the county was well-insulated from the growing threat of economic=20 recession.=20 But that was before the lights went out in the chamber's downtown=20 headquarters Monday.=20 Working by window light in his darkened office chamber economist Kelly=20 Cunningham rapidly erased his previous projections for 3.5 percent growth f= or=20 San Diego County. Cunningham now feels the local economy could fall into a= =20 recession thanks to its shaky supply of energy.=20 Report says power wholesalers overcharged California $5.5 billion=20 Disappearing state surplus sparks alarm=20 Out-of-state generators question power regulators' authority=20 Allegheny Energy makes big California connection=20 Enron stock slides despite earnings reassurance=20 California's electricity crisis at-a-glance=20 ?=20 Blackouts are very disruptive to the economy Cunningham said. A busines= s=20 can absorb rising energy prices by cutting costs or raising its own prices.= =20 But an energy shutoff is much less predictable. It cuts into productivity.= =20 Those sentiments are being echoed throughout California as business leader= s=20 and economists worry that rolling blackouts will darken the state's=20 previously glowing economy.=20 At the University of California Los Angeles for instance leading financia= l=20 theorists will meet April 4 to discuss the question Can California grow in= =20 the dark? Although the topic was chosen before the recent string of power= =20 outages the blackouts have given the issue new urgency.=20 These blackouts are not just a single episode said UCLA economist Tom=20 Lieser. They are a bridge to what will happen this summer. If we don't fal= l=20 into a recession in the second half of the year we will fall pretty close.= =20 Tapan Munroe an economist formerly with Pacific Gas and Electric this wee= k=20 crossed out his projection for 2 percent statewide growth. After blackouts= =20 rolled toward his consulting offices in the Bay Area city of Moraga Munroe= =20 decided the state will be lucky if it manages zero growth.=20 I'm a pretty optimistic guy by nature but this has been sobering Munroe= =20 said. On Tuesday one restaurant alone in San Francisco lost $20000.=20 Multiply that by all of the businesses that lost power in the state and=20 you've got a serious problem.=20 Two days of blackouts in San Diego County have hurt businesses large and=20 small. Among the industries under threat is the local biotechnology sector= =20 which requires a steady supply of electricity to power areas of laboratorie= s=20 that must remain temperature-controlled and sterile.=20 Continued blackouts could have a huge impact not only in dollars but=20 multiple millions of dollars said Tom Oster vice president of operations= =20 for BioCom the leading trade organization for the more than 200 biotechs i= n=20 San Diego County.=20 Idun Pharmaceuticals a biotech near La Jolla Village Drive that has 67=20 employees had its power cut for about 40 minutes Tuesday. Though the compa= ny=20 has a back-up generator some segments of its laboratories and lab equipmen= t=20 were not supported by it. Chemists also had to turn off some sensitive lab= =20 equipment to avoid the possibility of a damaging power surge once the=20 blackout was over.=20 We're not in a position as a small company to back up the whole facility= =20 said Steven Mento Idun's chief executive. We haven't done a survey yet to= =20 determine whether we had losses either in experiments or equipment damaged= =20 -- but we're hoping because the blackout was so short that damage will be= =20 minimal.=20 Mento said rolling blackouts coupled with continuing high energy costs=20 could cripple many small biotechs -- and even take a bite out of bigger mo= re=20 established companies.=20 We generate new compounds in controlled environments on a daily basis and= =20 when power goes off you can lose samples because of contamination and other= =20 issues Mento said. We are fortunate that our losses would be in having t= o=20 repeat an experiment -- but this could be really critical for companies wit= h=20 drug manufacturing and issues of quality control.=20 The wireless firms along Sorrento Valley have not been immune from blackout= s.=20 The lights went out at Qualcomm early this week although executives declin= ed=20 to comment about the impact.=20 No blackouts hit the big shipbuilding operations on the waterfront this wee= k.=20 But the National Steel and Shipbuilding Co. -- one of San Diego's largest= =20 employers -- already experienced a voluntary loss of power this year its= =20 first since World War II. Since the shipyard does not have its own power=20 supply NASSCO executives fear the effect of unplanned outages.=20 Our average payroll totals half a million dollars a day said NASSCO=20 spokesman Jim Scott. When you have a day's work disrupted that can be=20 pretty serious. We're currently in discussions about the possibility of=20 buying from independent power suppliers or setting up a power plant of our= =20 own.=20 Small businesses which constitute the bulk of employment in San Diego=20 County were hurt by disruptions as well -- costing them vital revenue at a= =20 time when their power bills have skyrocketed.=20 At Fantastic Sam's a hair salon in Chula Vista Angelica Alcala estimated= =20 that business dropped 60 percent when the blackouts hit Tuesday. Among othe= r=20 things Alcala had to alter her planned haircuts because she was relying on= =20 scissors instead of electric clippers.=20 At the Family Fun Center in El Cajon the management gave vouchers or refun= ds=20 to the 15 or so video-game players who were in the midst of killing aliens = or=20 fighting ninja warriors as the power went down.=20 Papa John's Pizza estimates that it may have lost several thousand dollars = in=20 business after six stores were blacked out Monday and four others lost powe= r=20 Tuesday. Brian Mills who runs 23 Papa John's stores in the county said hi= s=20 main concern was shutting down the computers so they would not be damaged b= y=20 a power surge when the electricity was restored.=20 Paul Ecke III a member of the West Coast advisory panel for the Federal=20 Reserve said the potential impact of the energy crisis is worse than any= =20 downturn in the stock market.=20 Ecke who runs the Paul Ecke Ranch flower operation in Encinitas said the= =20 crisis could be particularly harmful for the state's agricultural sector= =20 since farmers need electricity to pump water and natural gas to heat=20 greenhouses.=20 What I'm really worried about is the energy thing is going to cast a shado= w=20 on California he said. If you're a business person thinking about moving= =20 to California right now you're probably not going to do it because you're= =20 not sure you're going to have your lights on this summer.=20 Besides the disruption to businesses the energy crisis is also hurting the= =20 pocketbooks of hourly workers who have been sent home during the crisis.=20 Under state law employers are free to send hourly workers home without pay= =20 during such emergencies although salaried workers must still be paid.=20 Susan Kemp an attorney with the California Chamber of Commerce said there= =20 are ways of minimizing the impact on hourly workers.=20 You have to look at what time it is when the blackout occurs and how long= =20 you think it's going to last Kemp said. If it's around a meal time you= =20 might send the workers out for a longer meal period if you think it's going= =20 to be an hour or hour and a half delay.=20 But the potential for losing wages doesn't sit well with the hourly workers= .=20 When you get sent home early and lose your wages you have even less money= =20 to pay your inflated energy bills said an hourly worker who was sent home= =20 during Monday's blackout.=20 --- ---------- Out-of-state generators question power regulators' authority=20 By Karen Gaudette ASSOCIATED PRESS=20 March 22 2001=20 SAN FRANCISCO =01) At least three major out-of-state electricity generators= are=20 challenging the authority of the California Public Utilities Commission to= =20 investigate whether they deliberately reduced power supplies to drive up=20 prices.=20 The PUC has asked for power plant maintenance records as it tries to=20 determine whether Duke Energy Dynegy Inc. Mirant Corp. and other=20 wholesalers have manipulated the energy market at California's expense.=20 At issue is who ultimately controls oversight of in-state plants that provi= de=20 most of California's electricity. The plants once owned by the state's=20 largest utilities were sold off as part of the state's 1996 attempt at=20 deregulation.=20 Report says power wholesalers overcharged California $5.5 billion=20 Disappearing state surplus sparks alarm=20 Outages darken economic outlook in state some say=20 Allegheny Energy makes big California connection=20 Enron stock slides despite earnings reassurance=20 California's electricity crisis at-a-glance=20 ?=20 PUC President Loretta Lynch said the public deserves to know whether=20 generators have unnecessarily taken plants off-line to create artificial=20 shortages forcing the utilities and now state bureaucrats to buy much high= er=20 priced power on the spot energy market.=20 What I do know is we have historically high levels of outages across the= =20 board Lynch told The Associated Press. Dynegy and Duke have been fightin= g=20 the PUC in the PUC's quest to obtain documents about these outages.=20 The PUC has the authority to regulate facilities within its borders she=20 added. It doesn't matter where the headquarters of the company is.=20 Duke based in North Carolina says it does matter =01) and that since it a= nd=20 other wholesalers aren't headquartered in California the PUC can't require= =20 it to turn over the maintenance records.=20 We have not given them proprietary information because they do not regulat= e=20 us said Duke's spokesman Tom Williams.=20 Dynegy did not return calls for comment Wednesday.=20 The PUC also faces a new challenge in the legislature. A bill sponsored by= =20 Assemblywoman Carole Migden D-San Francisco which would have granted the= =20 PUC greater inspection authority over out-of-state generators was amended= =20 this month to grant the authority to Independent System Operator instead.= =20 The ISO has managed the delivery of energy through most of the state's powe= r=20 grid but historically has done little regulating and has had no policing=20 authority.=20 This board created during the state's 1996 attempt at deregulation was=20 redesigned in January. Now it has a five-member board appointed by Davis= =20 replacing a 26-member ISO board composed of utility executives marketers= =20 power plant owners and others.=20 The latest version of Migden's bill requires wholesalers to report monthly = to=20 the ISO about any plants that are off-line or working at reduced capacity= =20 and gives the ISO power to audit these reports.=20 But because the ISO board historically has made key decisions behind closed= =20 doors and is exempt from certain open-government regulations government=20 watchdogs are outraged by the switch.=20 The PUC's been no friend of ratepayers but at least under the constitutio= n=20 and state law they're required to conduct their process in the open and the= =20 public can intervene said Harvey Rosenfield of the Foundation for Taxpaye= r=20 and Consumer Rights.=20 Davis ordered last month that the ISO take the lead among state agencies to= =20 ensure adequate energy supplies. Alan LoFaso an aide to Migden said the= =20 amendment follows Davis' lead.=20 Both LoFaso and the governor's spokesman Steve Maviglio downplayed the=20 change. I don't know if we have a preference as to which state agency get= s=20 the authority to continue the probe Maviglio said.=20 The challenge by Duke Energy Houston-based Dynegy Inc. and Mirant Corp. of= =20 Atlanta came in filings March 12 asking for a rehearing of the PUC's Februa= ry=20 resolution reasserting its legal authority to examine the books accounts= =20 memoranda contracts and records of generators selling energy to utilities= =20 already subject to PUC regulation.=20 Those utilities include Pacific Gas and Electric Co. and Southern Californi= a=20 Edison Co. which have been nearly bankrupted buying power from wholesalers= =20 as well as the financially troubled San Diego Gas and Electric -- Allegheny Energy makes big California connection=20 ASSOCIATED PRESS=20 March 22 2001=20 HAGERSTOWN Md. =01) Allegheny Energy Inc. said Thursday it has agreed to s= ell=20 $4.5 billion worth of power to California's electricity-purchasing agency= =20 over the next 10 years.=20 The company said the contract call for Allegheny to provide up to 1000=20 megawatts that the Hagerstown-based company has secured from western=20 generating plants through its new energy trading division Allegheny Energy= =20 Global Markets =01) formerly Merrill Lynch Global Energy Markets.=20 This is a win-win for both the state of California and Allegheny Energy. I= t=20 provides a long-term source of fixed-price energy and should help to=20 stabilize prices in California said Michael P. Morrell president of the= =20 Allegheny Energy Supply division.=20 --- ----------- Judge Frees Small Firm From Edison Contract=20 By KEN ELLINGWOOD and DAN MORAIN Times Staff Writers=20 ?????EL CENTRO--California's balance of electrical power shifted slightly= =20 Thursday when an Imperial County judge temporarily freed a small geothermal= =20 energy producer from its contract with Southern California Edison allowing= =20 it to sell power on the open market. ?????The ruling by Superior Court Judge Donal B. Donnelly could lead to a= =20 mass exodus by hundreds of small energy producers that have been selling=20 power to the state's financially troubled utilities for months without=20 getting paid. ?????At the same time it may have staved off plans by a group of the small= =20 generators to send Edison into involuntary bankruptcy as early as today. ?????In Sacramento energy legislation pushed by Gov. Gray Davis passed in= =20 the state Senate but foundered in the Assembly. The measure was intended to= =20 ensure that the state gets repaid for the electricity that it has been buyi= ng=20 on behalf of Edison and Pacific Gas & Electric which say they lack the cas= h=20 and credit to purchase power. The bill also was supposed to guarantee that= =20 the small alternative energy producers--which together provide nearly a=20 third of the state's power--get paid. But Assembly Republicans opposed it= =20 saying it hadn't been given sufficient scrutiny. ?????The impact of the small producers was made clear in Imperial County= =20 where Edison's failure to pay CalEnergy the county's biggest property=20 taxpayer had outsize implications. CalEnergy had put county officials on= =20 notice that it was about to miss a $3.8-million property tax payment. The= =20 uncertainty had prompted the tiny Calipatria Unified School District to=20 postpone a bond issue for badly needed school repairs. ?????Among CalEnergy Chairman David Sokol's first acts after the judge's=20 ruling Thursday was to promise Imperial County Supervisor Wally J. Leimgrub= er=20 that the company would pay its property taxes on time. ?????That is great news Leimgruber said. ?????Within hours of its court victory CalEnergy had stopped transmitting= =20 geothermal power to Edison and begun selling it to El Paso Energy a=20 marketing company that purchased the energy at prevailing rates and resold = it=20 on the spot market. ?????Some of the more than 700 other small energy producers in the state sa= id=20 they were considering similar action against Edison and Pacific Gas &=20 Electric. ?????We absolutely need the right to sell to third parties said Dean=20 Vanech president of Delta Power a New Jersey company that owns five small= =20 gas-fired plants in California and is owed tens of millions of dollars by= =20 Edison. ?????Sokol praised the Imperial County judge and said his company simply=20 wanted the authority to sell its power to a credit-worthy company that in= =20 fact pays for the power. ?????An Edison spokesman said the company was disappointed with the ruling= =20 but sympathized with CalEnergy and other small producers because=20 California's power crisis has placed [them] in financial distress just as= =20 it has placed utilities in financial distress. ?????Edison expressed concern that the ruling would prompt CalEnergy and=20 other small producers to sell their power out of state. Sokol said CalEnerg= y=20 had specifically told El Paso Energy that it hoped its power would remain i= n=20 California but if someone wants to pay a higher price out of state we=20 can't stop them. ?????Sokol said that Edison still owes CalEnergy $140 million and that the= =20 company--along with seven other small producers--had been prepared to file = a=20 petition in federal bankruptcy court in Los Angeles today forcing the utili= ty=20 into involuntary bankruptcy. He said his company no longer intends to do so= =20 and he believed--but wasn't certain--that the other companies would shelve= =20 their plans. ?????Edison filed papers Thursday with the federal Securities and Exchange= =20 Commission showing that it owed $840 million to various small electricity= =20 producers many of which rely on renewable energy sources such as geotherma= l=20 steam solar energy or wind. ?????The alternative energy producers--and utilities--strenuously objected = to=20 the legislation considered in Sacramento on Thursday. The bill spelling ou= t=20 how the utilities are to pay the state and the small producers passed the= =20 Senate on a 27-9 vote the exact two-thirds margin required. But it stalled= =20 in the Assembly on a 46-23 party-line vote well short of two-thirds. ?????When I was a citizen back in Lancaster I heard these stories about= =20 pieces of legislation that were cooked up late at night that . . . were cu= t=20 and pasted together and were rammed through by the Legislature Assemblyma= n=20 George Runner (R-Lancaster) said. That's exactly what we have before us. ?????The alternative electricity generators including oil companies warne= d=20 that they would lose money under the Davis proposal while representatives = of=20 Edison and PG&E which have amassed billions in debt in the worsening energ= y=20 crisis said the legislation would push them deeper into the hole. ?????There isn't enough money Edison attorney Ann Cohn testified at a=20 Senate hearing on the bill Thursday. It is a very simple question: Dollars= =20 going out cannot be greater than dollars coming in. ?????The bill AB 8X combined several proposals. First it sought to clari= fy=20 earlier legislation by spelling out that Edison and PG&E must pay the state= =20 all money collected from consumers for electricity that the state has been= =20 buying. ?????Additionally the bill would turn over to the California Public=20 Utilities Commission the thorny issue of how much to pay alternative energy= =20 producers for their electricity. ?????Wind solar and geothermal producers might agree to the prices offered= =20 by the administration. But most of the alternative energy producers=20 including Chevron and British Petroleum use natural gas to generate=20 electricity through cogeneration a process of creating steam for both=20 electric generation and heat. With natural gas prices high they contend= =20 they would lose money at the prices Davis is offering. ---=20 ?????Ellingwood reported from El Centro Morain from Sacramento. Times staf= f=20 writers Mitchell Landsberg in Los Angeles and Jenifer Warren Nancy Vogel a= nd=20 Carl Ingram in Sacramento contributed to this story. --- ------------------- Lodi Defies Order for Blackouts=20 Utility tells PG&E to 'pay the bills'=20 Alan Gathright Chronicle Staff Writer Friday March 23 2001=20 2001 San Francisco Chronicle=20 URL:=20 /23/M N171303.DTL=20 Let history show that the rebellion against rolling blackouts started when= =20 the Central Valley town of Lodi defied PG&E and refused to unplug its=20 customers this week.=20 Like several cities that own their own utilities Lodi saw the energy crunc= h=20 looming last fall and spent millions for long-term power contracts in an=20 attempt to avoid blackouts.=20 Now Lodi and a Northern California municipal utility cooperative that=20 includes Palo Alto Santa Clara and Alameda are telling Pacific Gas and=20 Electric Co. that it's unfair to force their customers to endure blackouts= =20 triggered by the near-bankrupt utility's failure to pay its debts.=20 The problem is not paying bills so pay the bills said Alan Vallow=20 director of the utility serving Lodi's 58000 residents. I won't arbitrari= ly=20 screw my customers . . . so 5000 PG&E customers can turn on their lights= =20 somewhere else.=20 When PG&E relayed an order from state power regulators Monday and Tuesday f= or=20 Lodi to black out some of its customers a strategy intended to keep the=20 West's power grid from collapsing Lodi said no.=20 So far other cities in the Northern California Power Agency say they will= =20 continue to participate in rotating outages.=20 But in a letter last Friday to PG&E members of the agency and four other= =20 utility districts including Sacramento's warned they didn't believe long-= =20 standing agreements that allow them to use PG&E transmission lines to conne= ct=20 to the grid obliged them to endure rolling blackouts because of PG&E's=20 failure to pay its power obligations.=20 They say the agreements require them to reduce power demand only in respons= e=20 to natural disasters or malfunctions damaging power lines or plants.=20 The agencies asked for a meeting with PG&E President Gordon Smith before=20 anticipated summer blackouts hit to develop a more rational program for= =20 allocation of risks associated with (power demand) load shedding before you= =20 call on us to participate in load shedding again.=20 REFUSING TO SHARE BURDEN PG&E officials accused Lodi of selfishly refusing to share the burden of th= e=20 statewide energy crisis.=20 It is regrettable that after reaping the benefits of the (power grid)=20 interconnection contract for many years Lodi is suddenly unwilling to bear= =20 their share of the burden of the statewide energy crisis said PG&E=20 spokesman Ron Low. When cities like Lodi do not follow the (state=20 Independent System Operator's) order to curtail power it hurts all of=20 California and jeopardizes the entire power grid.=20 Low also disagreed with accusations that this week's blackouts were trigger= ed=20 by PG&E's failure to pay its bills noting that the ISO stated that 12000= =20 megawatts of power were offline because of plant maintenance.=20 But ISO spokeswoman Lisa Szot confirmed assertions by the municipal utiliti= es=20 that power generators had kept an additional 3000 megawatts offline becaus= e=20 they feared PG&E couldn't pay.=20 Lodi's Vallow said he was legally obliged to serve city customers. Lodi=20 residents are facing rate increases of as much as 15 percent under a power= =20 contract that the city secured in hopes of avoiding blackouts. The contract= =20 required Lodi to pay a $10 million premium above its typical $23 million=20 annual energy bill.=20 'THAT'S NOT FAIR'=20 I've been hearing (PG&E say) 'Gee that's not fair. Where's the equity if= =20 everybody is doing rolling blackouts and you're not?' Vallow said. Well= I=20 put my customers at financial risk to the tune of $10 million. And if they'= re=20 not going to get to use that power they paid for then by God give us that= =20 money back.=20 Vallow said he was willing to sell PG&E some of Lodi's power surplus knowi= ng=20 Lodi might not be paid.=20 But I'm not willing to turn off 5000 customers so 5000 customers=20 somewhere else can turn their lights on Vallow said. The objective here= =20 people is to keep as many lights on as possible.=20 Other city-owned utilities while annoyed with the rolling blackouts aren'= t=20 going as far as Lodi.=20 WEATHERING BLACKOUTS I certainly understand the frustrations of utilities like Lodi and actuall= y=20 share those frustrations in many cases said John Roukema assistant=20 director of Santa Clara's utility.=20 But he stressed that his agency had been able to weather blackouts without= =20 hurting residents or small business because 17 major industrial power user= s=20 had agreed to curtail demand during energy alerts.=20 The prudent thing to do at this time is to continue to do our share and=20 participate in rolling blackouts because a single problem could cause a=20 catastrophic failure in the statewide system Roukema said.=20 In Alameda residents endured blackouts this week despite the fact that cit= y=20 has secured reliable power supplies said Matt McCabe spokesman for Alamed= a=20 Power & Telecom.=20 It was in the best of interests of Alamedans to maintain the stability and= =20 integrity of the grid he said. Now if it becomes evident that the syste= m=20 is being jeopardized for financial reasons then we should not have to=20 subject Alamedans to rolling blackouts.=20 In Palo Alto which also had blackouts this week utility officials told th= e=20 City Council they were expecting a 30 to 40 percent rate hike this spring t= o=20 pay new contracts guaranteeing a stable power supply said Councilman Bern= =20 Beecham. The city hopes to avoid giving customers the double whammy of rate= =20 boosts and more blackouts with a program that gets industrial users to cut= =20 demand voluntarily during alerts.=20 When there's not enough generating capacity in the state to protect the=20 integrity of the grid that is in fact everybody's problem Beecham said= =20 but that doesn't mean Palo Alto is willing to endure blackouts to prop up= =20 PG&E's ailing finances.=20 We need to have some very frank discussions with PG&E about mutual=20 obligations Beecham said.=20 Energy Tips=20 With Californians facing electricity and natural gas shortages PG&E has=20 several tips to help conserve both:=20 -- Set the furnace thermostat at 68 degrees or lower health permitting.=20 -- Wash only full loads in a dishwasher. If operating instructions allow= =20 turn dishwasher off before the drying cycle and let dishes dry naturally.= =20 -- Use low-wattage or fluorescent lights.=20 -- Fix defective plumbing and dripping faucets which waste water and=20 increase the gas or electric bill for heating the water.=20 -- Plug gaps around pipes ducts fans and vents that go through walls=20 ceilings and floors.=20 -- Keep furnaces clean and clean or replace the filter regularly.=20 -- Turn heaters down when using a fireplace and close the damper when not= =20 using the fireplace.=20 -- On sunny days open drapes on windows facing south and let the sun shine= =20 in. At night close the drapes to retain indoor heat.=20 Source: www.pge.com=20 E-mail Alan Gathright at 2001 San Francisco Chronicle ? Page?A - 1=20 --- Coming Down to the Wire=20 State legislators battle over alternative energy bills=20 Greg Lucas Robert Salladay Chronicle Sacramento Bureau Friday March 23 2001=20 2001 San Francisco Chronicle=20 URL:=20 /23/M N113351.DTL=20 Sacramento -- After several weeks of slow to no progress in attacking the= =20 state's energy mess the Legislature erupted yesterday into a frenzy of=20 energy activity.=20 The sudden action on a series of energy bills -- including one to let=20 businesses buy power directly from generators -- stemmed initially from the= =20 fear of bad publicity lawmakers might receive for a planned three-day junke= t=20 next week to Washington D.C.=20 When a key bill bogged down in the Assembly late yesterday Speaker Bob=20 Hertzberg D-Sherman Oaks announced the trip was canceled.=20 Another reason for the flurry of action was recognition that time is runnin= g=20 out.=20 Several alternative energy producers -- like wind farms and biomass plants = -=20 - said they were one day away from forcing the state's two biggest utilitie= s=20 into bankruptcy because they were owed more than $1 billion.=20 The Legislature's action and a court ruling that could free alternative=20 producers from unpaid contracts.=20 This is triage members of the Senate said Sen. Jim Costa D-Fresno. Th= is=20 is crisis activity we're engaged in.=20 The Senate approved a bill aimed at helping state regulators get cash to so= me=20 alternative energy producers. Most of them have been paid little or nothing= =20 since November by the utilities they sell electricity to.=20 Senators passed a bill to help the Public Utilities Commission order=20 utilities to pay solar wind and other alternative energy producers who sig= n=20 lower-priced contracts with the utilities.=20 The bill failed in the Assembly because of GOP opposition fanned in part b= y=20 price concerns by the oil industry a major co-generation producer. The=20 Assembly is set to meet again today to try again pass the bill which the P= UC=20 needs to issue its final order.=20 The PUC's proposed order offers the first hint of financial relief for=20 hundreds of alternative energy producers known as ''qualified facilities = in=20 the energy industry who have been paid just pennies on the dollar by cash-= =20 strapped Pacific Gas & Electric and Southern California Edison.=20 Lack of payments has caused many alternative generators to shutter their=20 operations.=20 The PUC's proposal which will be considered at the commission's meeting=20 Tuesday offers generators a choice of agreeing to a five-year contract at= =20 $79 per megawatt or a 10-year deal at $69 per megawatt Davis said. The goi= ng=20 rate now is about $150 a megawatt hour.=20 The order does not address money already owed to the more than 600=20 alternative energy producers.=20 Under the order utilities would have to pay any generator who signed the n= ew=20 contracts within two weeks.=20 But PG&E said it might not be able to afford do that.=20 Operators of co-generation facilities say the contracts contemplated by the= =20 PUC don't cover their cost of producing energy because the sale price no=20 longer would be pegged to the the price of natural gas.=20 In a significant court decision affecting generators one geothermal energy= =20 supplier in Imperial County won a lawsuit yesterday against Edison allowing= =20 the company to escape a contract requiring it to sell electricity to the=20 utility.=20 A superior court judge said CalEnergy operator of the geothermal plant=20 could suspend deliveries to Edison and sell the 268 megawatt hours it=20 generated on the open market.=20 CalEnergy is owed $75 million by the utility.=20 The court victory may ease mounting pressure from some qualified facilities= =20 including CalEnergy to drive one or both of the utilities into involuntary= =20 bankruptcy.=20 The Assembly and Senate meanwhile rushed through a series of bills aimed = at=20 increasing energy conservation and rushing the building of new power plant= s.=20 Most significant for bigger residential and commercial utility customers is= a=20 measure passed by the Assembly to allow energy customers to buy power=20 directly from generators.=20 That right was eliminated in January when the state began buying power for= =20 the cash-strapped utilities.=20 The bill approved unanimously yesterday would impose a yet to be determined= =20 exit fee on customers who leave the power grid to help cover the state's=20 financial exposure.=20 Tell Us What You Think=20 Can you save 20 percent on your energy use? Gov. Gray Davis' administration= =20 is offering rebates for Californians who save on power starting in June an= d=20 if you've got a strategy for conserving The Chronicle wants to hear it.=20 We'll be writing about the hardest-working energy savers in a future story.= =20 To get involved write to the Energy Desk San Francisco Chronicle 901=20 Mission St. San Francisco CA 94103 or e-mail [email protected]= .=20 E-mail the reporters at [email protected] and [email protected]= m.=20 2001 San Francisco Chronicle ? Page?A - 14=20 --- State's bill for energy could double this year=20 Posted at 9:34 p.m. PST Thursday March 22 2001=20 BY=20 STEVE=20 JOHNSON=20 AND=20 JOHN=20 Warning that California is imperiled by the prices it is paying for=20 electricity a report Thursday said the state's annual power tab could wind= =20 up being 10 times what it was two years ago.=20 At the current rate of spending the report estimated that the total=20 electricity bill in California this year could hit $70 billion which is mo= re=20 than twice what it was last year and about 10 times what was paid in 1999 a= nd=20 1998.=20 ``The California electricity market has gone from being `dysfunctional' to= =20 precipitating a crisis'' according to the report from the Independent Syst= em=20 Operator.=20 It added that the price being charged ``threatens any semblance of just and= =20 reasonable consumer rates the financial viability of California's=20 investor-owned utilities the financial stability of California of its=20 neighboring states and of the nation.''=20 While power suppliers denied any wrongdoing the report said the state=20 appears to have been hit with ``excess'' charges totaling $6.87 billion sin= ce=20 May based on an assessment of the typical operating costs of power plant= =20 owners. Out of that total $6.2 billion appeared to be excessive charges=20 during times when power was not in particularly short supply the agency=20 said.=20 The cost of power has become a growing concern now that the state has stepp= ed=20 in to buy it on behalf of Pacific Gas & Electric Co. and Southern Californi= a=20 Edison which claim to be so strapped for cash that they are on the verge o= f=20 bankruptcy.=20 In making public the report which was sent to the Federal Energy Regulator= y=20 Commission officials at the Independent System Operator were careful not t= o=20 accuse any power companies of price gouging. While the prices appeared to b= e=20 unreasonable they said the state needs to learn more about the specific= =20 operating costs of power plant operators before they could determine whethe= r=20 California was cheated.=20 The officials said they were considering asking the federal agency which= =20 oversees power wholesalers to order the suppliers to make refunds. In the= =20 past two weeks the federal agency has warned a number of suppliers that th= ey=20 may have to refund $135 million in apparent overcharges during January and= =20 February.=20 But many experts question whether the federal agency is serious about=20 demanding such refunds so California officials also are reviewing the=20 possibility of suing the suppliers or seeking criminal charges against some= =20 of them. ``We're working very closely with a number of agencies to review t= he=20 information we currently have to determine what remedies may be available'= '=20 said Charles Robinson the Independent System Operator's general counsel.= =20 The report's suspicions were partly bolstered by another study made public= =20 Thursday by the state auditor. It said California's market structure=20 encouraged bidding gamesmanship by both utilities and power sellers ``in an= =20 effort to manipulate wholesale prices to their advantage.'' But it stopped= =20 short of accusing power generators of profiting illegally.=20 ``There's clearly some evidence of market abuse'' said state Auditor Elain= e=20 Howle. Even so she added ``that's not to say it's anything illegal. We=20 hired consultants they looked at some of the bidding and they weren't=20 comfortable going that far.''=20 Although no power companies were named in either report officials with=20 several suppliers insisted they have done nothing wrong.=20 ``We've conducted our business legally and ethically'' said Richard=20 Wheatley spokesman for Reliant Energy which runs five major California=20 power plants. ``The ISO report appears to be nothing more than just another= =20 attempt to put blame at someone else's doorstep when there's been very=20 little action out of Sacramento to resolve the problems in the California= =20 marketplace.''=20 Duke Energy spokesman Jeremy Dreier said the company which runs plants in= =20 Moss Landing and Morro Bay sold most of its power last year and this year = in=20 relatively low-cost long-term contracts and was among the first to offer= =20 such deals to the state. He added that Duke increased production from its= =20 aging plants to meet surging demand.=20 ``The fact that we were among the first to bring long-term contracts to the= =20 table speaks volumes about how we're trying to serve this market'' Dreier= =20 said.=20 John Sousa of Dynegy Inc. which co-owns three major California plants add= ed=20 that ``given the market conditions the rates we charged were just and=20 reasonable.''=20 --- Plan for alternate power plants stalls=20 Posted at 10:03 p.m. PST Thursday March 22 2001=20 BY DION NISSENBAUM AND JENNIFER BJORHUS=20 Mercury News=20 SACRAMENTO -- The state's prospects for plugging a critical electricity gap= =20 dimmed Thursday when the state Assembly rejected a rescue plan for=20 alternative power companies and a state judge ruled that one such firm coul= d=20 stop selling energy in California.=20 Both actions threaten the plan Gov. Gray Davis announced just Tuesday to ke= ep=20 these companies running and stave off more blackouts. With the state's=20 troubled utilities failing to pay for their electricity many alternative= =20 energy plants have been shutting down.=20 The dual blows came on a day when tempers flared in the Capitol as lawmaker= s=20 jarred by back-to-back blackouts launched bipartisan attacks on Pacific Gas= &=20 Electric Co. and Southern California Edison which aren't paying wind sola= r=20 biomass geothermal and small gas-fired plants for their electricity.=20 After Republicans shot down the measure meant to keep alternative energy=20 companies in business Assembly Speaker Robert Hertzberg D-Van Nuys warne= d=20 that the restless companies might act on their threat to force the utilitie= s=20 into bankruptcy.=20 ``They said it and I understood them to mean it'' he said.=20 The failure overshadowed a burst of action in Sacramento where lawmakers=20 approved a host of other measures. The Senate approved two key bills: one= =20 that would spend more than $1 billion to encourage Californians to conserve= =20 energy and one that would make it easier to build power plants. The Assembl= y=20 approved 14 incremental bills.=20 Six votes short=20 But the Assembly fell six votes short of passing a hastily prepared bill=20 meant to help prop up the nearly 700 alternative energy companies many of= =20 which are now idle.=20 Those closings sapped California of energy this week and helped cause two= =20 days of rolling blackouts -- the first since January.=20 In response Davis and lawmakers cobbled together a plan to set new lower= =20 rates for alternative power and to fine the utilities if they refuse to pay= =20 these companies which supply up to a third of the state's power.=20 But Republicans refused to back the measure and said it contained too many= =20 complex parts that needed more time to analyze.=20 ``Everyone in this room knows that this piece of legislation has not had a= =20 good look'' said Assemblyman George Runner R-Lancaster.=20 Assemblyman Fred Keeley D-Santa Cruz castigated the Republicans and=20 implored them to accept an imperfect solution.=20 ``Ladies and gentlemen: Welcome to the NFL'' he said. ``Welcome to the wor= ld=20 where large complex issues don't have a simple solution.''=20 Approval is needed before state regulators at the Public Utilities Commissi= on=20 can vote on the fine points of the plan. That was supposed to happen Tuesda= y.=20 Much of the criticism focused on concerns raised by power plants that use= =20 natural gas to produce energy. Administrators from those plants said the=20 Davis price caps would make it impossible for them to break even.=20 The derailment came hours after the measure narrowly won approval in the=20 state Senate.=20 Hertzberg plans to search for a compromise today and canceled plans for the= =20 Assembly's annual trip to Washington.=20 Thursday's actions were highlighted by angry attacks on the utilities by=20 frustrated lawmakers.=20 ``I hope they do go bankrupt'' shouted Senate President pro tem John Burto= n=20 D-San Francisco during a debate on the energy crisis. ``Let them go belly= =20 up. I don't care any more.''=20 Legal decision adds twist=20 The legislative failure was compounded by a legal decision in Southern=20 California that further complicated the picture.=20 A Superior Court judge in Imperial County cleared the way for CalEnergy=20 Operating Corp. to break its contract with Edison and sell its 268 megawatt= s=20 of power on the open market. The judge concluded that Edison had breached i= ts=20 contract by failing to pay CalEnergy since November.=20 That ruling could pave the way for hundreds of others to follow suit and=20 drain off power California needs to prevent blackouts.=20 ``It's not good'' said V. John White director of the Center for Energy=20 Efficiency and Renewable Technologies. ``This is potentially going to chang= e=20 the dynamics of the situation and probably not for the better.''=20 Jan Smutny-Jones executive director of the Independent Energy Producers=20 Association said it was unclear whether other companies would sue.=20 ``I think this is a very significant development'' he said. ``We're sort o= f=20 at a period where the industry's reaching the end of the rope.''=20 The ruling did have one silver lining: CalEnergy Chairman David Sokol said= =20 his company and seven others had planned to force Edison into bankruptcy if= =20 they lost in court.=20 But he also warned ``You stick a sharp stick in enough people's eyes and= =20 they get pretty tired of it.''=20 The situation with generators supplying PG&E isn't as dire since the compan= y=20 has been making partial payments.=20 Kent Burton senior vice president for Covanta Energy Corp. in New Jersey= =20 said ``They've tried to be responsive.''=20 Mercury News Staff Writer Mark Gladstone contributed to this report. Contac= t=20 Dion Nissenbaum at [email protected] or (916) 441-4603 or Jennifer= =20 Bjorhus at [email protected] or (408) 920-5660. What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Energy Issues Body:: Please see the following articles: Sac Bee Wed 6/6: Businesses vie for blackout exemptions:=20 The PUC must decide who should be spared and the applicant list is very lo= ng Sac Bee Wed 6/6: PG&E ISO agree to court order on power bills Sac Bee Wed 6/6: Peter Schrag: Turning up the heat in Houston and=20 Washington (Editorial) SD Union Wed 6/6: Is trading an insider's game? SD Union Wed 6/6: Daily energy costs for state fall in past weeks=20 SD Union Wed 6/6: Five tiers sought in proposed rate boost SD Union Wed 6/6: Port budget large but power bills loom SD Union Wed 6/6: Continuous use urged for planned power plant=20 SD Union Wed 6/6: Rising energy prices threaten Poway troupe=20 SD Union Wed 6/6: Fair to use generators for midway attractions LA Times Wed 6/6: 'Hi My Name Isn't Justice Honey' and Shame on Lockye= r =20 (Editorial) LA Times Wed 6/6: U.S. Probes Alleged Pact Not to Build New Plants Power:= =20 Justice officials focus on Southland operations of two firms which deny=20 wrongdoing LA Times Wed 6/6: Natural Gas Power Prices Drop Sharply Energy:=20 More conservation mild weather are among factors keeping costs down exper= ts=20 say LA Times Wed 6/6: The State Utility Averts $1 Billion in Costs Courts:=20 PG&E and Cal-ISO agree to recognize Department of Water Resources as=20 purchaser of the power SF Chron Wed 6/6: Dramatic drop in cost of electricity=20 LOWER BILLS: Cheaper fuel milder weather credited SF Chron Wed 6/6: San Jose council gives green light to generating plant= =20 VOTE REVERSAL: Officials pressured to OK project SF Chron Wed 6/6: Developments in California's energy crisis SF Chron Wed 6/6: California conserves SF Chron Wed 6/6: L.A. power customers awash in cheap energy SF Chron Wed 6/6: PG&E doesn't want to pay for energy to avert blackouts Mercury News Wed 6/6: Metcalf plant gets preliminary approval=20 OC Register Wed 6/6: Feds probe AES Williams Individual.com (PRnewswire) Wed 6/6: Calpine Begins Construction of=20 Peaking Energy Center in Gilroy Calif.=20 Individual.com (PRnewsire) Wed 6/6: Reliant Urges FERC to Drop or Amend= =20 California Price Caps to Avoid Additional Shortages and More Blackouts Energy Insight Wed 6/6: Farm-fresh biopower --- Businesses vie for blackout exemptions: The PUC must decide who should be= =20 spared and the applicant list is very long. By Carrie Peyton and Dale Kasler Bee Staff Writers (Published June 6 2001)=20 Mixes for milkshakes and frozen coffees could spoil at ice cream parlors= =20 sickening customers.=20 Seniors getting their hair done would have to leave their dryers and go hom= e=20 with wet heads risking a chill.=20 Mall escalators could come to a sudden halt endangering shoppers who lose= =20 their footing.=20 Those are among the health and safety risks cited by more than 10000=20 businesses and government bodies asking state regulators to exempt them fro= m=20 rolling blackouts.=20 It is a list that mixes nursing homes and grocery stores outpatient surgic= al=20 clinics and beauty salons dialysis centers and country clubs.=20 A lot of people are treating this like a lottery said Subodh Medhekar of= =20 Exponent Inc. the consulting firm sorting through exemption requests for t= he=20 state Public Utilities Commission.=20 For many Medhekar said the rationale seems to be 'I'm pretty sure I won= 't=20 get exempted but what's the down side? Let's put in an application.' =20 Amid predictions that Californians could face dozens of rolling blackouts= =20 this summer state regulators are trying to update a decades-old list of wh= o=20 should be spared if the lights go out.=20 The Alta Sierra County Club in Grass Valley should be among those whose pow= er=20 stays on Sean O'Brien the club's golf course superintendent told=20 regulators in a nine-page application.=20 The country club telephones could go out making it harder to phone for hel= p=20 if someone has a medical problem while golfing he said in an interview.=20 And if the golf course's irrigation pumps shut down it would lose the=20 ability to quell small blazes -- leaving it to rely on a fire station O'Bri= en=20 said is about one-quarter mile away.=20 Placerville Dialysis wants an exemption too. As many as a dozen people the= re=20 can be having their blood pumped through an artificial kidney that cleans i= t=20 when their own kidneys no longer function properly.=20 When the power goes out everything just stops said manager Shirley=20 Carpenter. There is a way to manually return the blood by hand before it= =20 clots in the line. ... It would just be hectic.=20 It takes about five minutes of manual pumping to fully disconnect someone= =20 from a dialysis machine Carpenter said. And some patients can help by=20 operating their own pumps.=20 But she said I'm sure it would be kind of frightening to have your blood= =20 out in the line and the power off and they're pretty much tied to the=20 machine.=20 Pam Chin a hairdresser at the Loomis Beauty Salon said the owner sought a= n=20 exemption because people could get overheated if the air conditioning went= =20 out and older customers getting their hair set could be chilled if the=20 dryers shut off.=20 With about half the state already exempt from rolling blackouts the questi= on=20 of who else should stay connected has become a delicate one for utilities= =20 regulators and legislators.=20 Carl Wood the PUC commissioner who has taken the lead on blackout issues= =20 estimates that fewer than 1000 more utility customers can be exempted befo= re=20 they overload the rolling outage system designed to take stress off the=20 electric grid.=20 While about 6000 customers are classified as essential by the state's tw= o=20 largest utilities keeping them out of the blackout rotation also spares=20 about 5 million other customers who are served by the same circuits.=20 That multiplier effect will have to be weighed by the consulting firm by= =20 utilities and eventually by PUC commissioners who are scheduled to vote in= =20 early August on who should be added to existing standards.=20 The rules will apply to the state's investor-owned utilities Pacific Gas a= nd=20 Electric Co. Southern California Edison and San Diego Gas & Electric Co.= =20 but not to municipal utilities.=20 The Sacramento Municipal Utility District already rejected pleas for specia= l=20 exemptions from a medical lab a veterinary hospital nursing homes medica= l=20 facilities businesses and residents. SMUD believes they can weather=20 blackouts because they are not critical to public safety.=20 People have counted on having dependable electricity for so long that some= =20 have widely varying ideas of who can do without it safely Medhekar said.= =20 Of the more than 500 Baskin Robbins ice cream parlors that dot California= =20 only five are listed on the PUC Web site as applicants for exemptions.=20 The site cautions that its list of 9239 electronic applicants hasn't been= =20 checked for duplicates -- or fiction. It includes hundreds of outlets of th= e=20 same drug store and supermarket chains dozens of related nursing homes and= =20 more than 400 dentists. Another 1200 commercial power users have applied b= y=20 fax.=20 Among those who have confirmed they want out of outages are the grocery=20 chains operated by West Sacramento-based Raley's which said it took the=20 action as part of united effort with all California grocers who are worrie= d=20 about food spoilage.=20 Others in the mix are Fairfield's Westfield Shoppingtown Solano formerly t= he=20 Solano Mall where officials sought the exemptions out of fear that shopper= s=20 would get injured if escalators came to a sudden halt.=20 The Yolo County Housing Authority asked for an exemption on behalf of its 7= 00=20 dwellings in the belief that the utilities offer exemptions for low-income= =20 Californians Executive Director David Serena said.=20 Serena added that many of the authority's occupants are older or disabled a= nd=20 could be endangered by a blackout.=20 Chevron Corp. acknowledged it couldn't show that a blackout at its refineri= es=20 would present imminent danger to public health or safety but it asked Go= v.=20 Gray Davis to support legislation exempting makers and transporters for=20 critical fuels saying a refinery shutdown would cut into the state's=20 gasoline supply.=20 Some businesses acknowledged that their applications are a long shot.=20 It's probably a stretch said Amanda Leveroni who owns Bacio Catering Co= .=20 of Chico about her request to the PUC. The public wouldn't be in danger.= =20 But we're a catering company -- somebody has planned for a year-plus for a= =20 wedding or some big event she added. I would be in such a huge situation= .=20 I'd have to send out for pizza.=20 The Bee's Carrie Peyton can be reached at (916) 321-1086 or=20 [email protected]. PG&E ISO agree to court order on power bills By Claire Cooper Bee Staff Writers (Published June 6 2001)=20 SAN FRANCISCO -- Pacific Gas and Electric Co. and the operator of=20 California's power grid agreed Tuesday to a preliminary court order providi= ng=20 that the utility will continue to receive -- but not pay -- generators' bil= ls=20 for the state's purchases of the most expensive wholesale electricity.=20 The tab has been running at about $300 million a month.=20 The order which U.S. Bankruptcy Judge Dennis Montali said he'll sign will= =20 specify that the Independent System Operator will not procure power except= =20 for a creditworthy buyer who has agreed to pay the generator.=20 In California the only such potential buyer is the state Department of Wat= er=20 Resources. However the department which has avoided PG&E Co.'s bankruptcy= =20 proceedings by claiming sovereign immunity will not be controlled by the= =20 agreement. Montali pointed out that the department still could demand=20 reimbursement from PG&E.=20 Under the agreement the ISO will not press any claims against PG&E on beha= lf=20 of generators if they are not paid.=20 The proposed preliminary injunction was based on an April order by the=20 Federal Energy Regulatory Commission which forbade the ISO from purchasing= =20 power on behalf of any non-creditworthy buyer such as PG&E.=20 The ISO is appealing the FERC order. If the appeal succeeds the injunction= =20 will end.=20 Peter Schrag: Turning up the heat in Houston and Washington (Published June 6 2001)=20 Behind all the palaver about the predictable standoff at last week's energy= =20 summit between President Bush and Gov. Gray Davis one major political=20 development was missed.=20 Put simply in the past month the focus of the California energy crisis an= d=20 maybe the onus as well has moved east: from the state's (and Davis')=20 handling of the mess to the generating companies energy marketers and gas= =20 pipeline companies that have richly profited from it and thus to FERC the= =20 do-next-to-nothing Federal Energy Regulatory Commission and the Bush=20 administration.=20 That wasn't all Davis' doing -- far from it -- though it's been at the hear= t=20 of his message about energy industry pirates and profiteers. Bush's=20 misbegotten energy plan and the administration's political clumsiness also= =20 contributed mightily not least by inadvertently giving Davis the chance to= =20 get media exposure he could only have dreamed about.=20 More important there's the defection of Sen. James Jeffords from the=20 Republican Party and the resulting shift of control in the U.S. Senate whe= re=20 the next chair of the Energy Committee will be Sen. Jeff Bingaman of New=20 Mexico a co-sponsor of Sen. Dianne Feinstein's bill capping wholesale=20 electric rates for the next two years. And chairing the Committee on=20 Governmental Affairs will be Sen. Joseph Lieberman of Connecticut who's=20 already asked for an audit of energy prices.=20 Those changes will draw a lot more attention to recent studies showing that= a=20 handful of big generators -- Duke Power Reliant Mirant Dynegy and the hu= ge=20 energy-marketing firm Enron -- have gamed the market to drive wholesale=20 prices to levels that in the year 2000 sometimes reached 40 times the=20 prices of the year before.=20 The findings come not merely from economists at the California Independent= =20 System Operator the agency that manages the state's grid who estimate=20 overcharges resulting from market power at $6.2 billion for last year alone= .=20 They come also from Severin Borenstein and his colleagues at the University= =20 of California Energy Institute who conservatively calculate the=20 overcharges at $4.5 billion from Paul Joskow a widely respected energy=20 economist at MIT and from Edward Kahn an economic analyst in San Francisc= o.=20 In a recent paper published by the National Bureau of Economic Research=20 Joskow and Kahn conclude that there's considerable evidence that the high= =20 prices experienced in the summer of 2000 reflect the withholding of supplie= s=20 from the market by suppliers [generators or marketers] exercising market=20 power. That those high prices occurred not merely during peak usage but al= so=20 at off-hours when no one had ever seen a price spike before makes those= =20 spikes even more curious.=20 There is in addition the powerful suspicion that the huge increase in=20 natural gas prices that a subsidiary of El Paso Energy Co. now the largest= =20 gas company on Earth was charging on the California side of the=20 California-Arizona border wasn't merely the result of an innocent imbalance= =20 between supply and demand.=20 None of that may be illegal. If there's no collusion there are no violatio= ns=20 of antitrust laws. But it adds plenty of steam to the political argument. I= n=20 the 2000 election cycle alone energy companies kicked in some $64 million = in=20 political contributions 75 percent of it to Republicans. At a time when=20 those companies many of them located in the same Houston neighborhood are= =20 racking up astronomical profits and when their collective coziness with Bus= h=20 and the Republican Party is a lot more than rhetoric their vulnerability t= o=20 a vigorous Senate investigation ought to be obvious.=20 The clincher is Blackout a Frontline program that both symbolizes the= =20 shifting emphasis and reinforces it. (The program is scheduled to be aired = at=20 8 p.m. Friday on Sacramento cable Channel 7.) It isn't another recital of= =20 Californians worrying about their electric bills or about the stupidity of= =20 the state's deregulation scheme or how Davis dithered in addressing the=20 crisis. It is about those generators and marketers in Houston and North=20 Carolina men (and a few women) who regard themselves as the heroes of the= =20 new energy markets.=20 The piece is reported by Lowell Bergman who in working for both Frontline= =20 and the New York Times has already broken major print stories about Duke=20 Power's secret approach to Davis offering unspecified energy refunds in=20 return for an end to state investigations and lawsuits. Bergman also report= ed=20 private conversations between Enron chairman Kenneth Lay a major Bush=20 supporter and FERC chairman Curt Hebert regarding the influence that Lay= =20 could exercise with Bush to allow Hebert to keep his chairmanship if Hebert= 's=20 supported certain decisions Enron badly wants.=20 None of these recent events is likely to end Davis' political woes and the= y=20 may not produce the wholesale rate caps Feinstein wants and that most=20 economists think necessary -- or maybe any significant reduction in the=20 industry's predatory pricing. But they will surely help turn up the heat= =20 both in Houston and Washington. Six months ago FERC found wholesale prices= =20 were not fair and reasonable as federal law requires but did little abou= t=20 them. It will now have a lot more questions to answer.=20 Peter Schrag can be reached at Box 15779 Sacramento CA 95852-0779 or at= =20 [email protected]. Is trading an insider's game?=20 Buying selling of electricity is a growth business but some say deck is= =20 stacked against consumers By Craig D. Rose=20 UNION-TRIBUNE STAFF WRITER=20 June 6 2001=20 While Californians decry deregulation's failure to deliver a competitive=20 market electricity wholesalers have quietly developed a vast and rapidly= =20 growing business of buying and selling power among themselves.=20 The deals take place on high-tech trading floors in Houston and elsewhere= =20 around the country as well as on Internet-based trading systems.=20 Some experts say this electricity trading is a key mechanism for raising=20 consumer power prices yet it's largely unregulated.=20 Electricity trading is like buying stock -- when you have ability to chang= e=20 the stock price said Frank Wolak a Stanford University economics profess= or=20 and member of the state grid operator's market surveillance group.=20 Energy companies say the buying and selling of contracts to deliver power= =20 provides risk management allowing plant owners to presell their electricit= y=20 lock in prices and avoid fluctuations. The rough and tumble of the free=20 market they add is the most efficient means of allocating a resource like= =20 electricity.=20 But industry critics say trading is far from a competitive market paradigm.= =20 In their view it's a means of communication -- a way for energy insiders t= o=20 collude and raise prices under the guise of competition.=20 To be sure the trading arms of major energy companies have emerged as star= s=20 in an industry where profit surges of 300 percent or 400 percent are not=20 uncommon.=20 The transactions shrouded in secrecy can leave ownership of a critical=20 commodity in unknown hands. Consider the case of power generated by AES=20 Corp.'s California plants.=20 In 1998 AES made a bold move. Immediately after purchasing power plants th= at=20 gave it control of 10 percent of the state's electric generating capacity= =20 the company sold the output from its plants for the next 20 years to Willia= ms=20 Cos.=20 Williams did not sit on this treasure trove of electrons. The Tulsa Okla.= =20 company soon sold 80 percent of what it bought.=20 It is difficult to say who owns that power now. Some might be owned by Semp= ra=20 Trading a sister company of SDG&E. Or some could be owned by Enron Corp.= =20 the nation's biggest electricity trader.=20 A spokeswoman for Williams conceded that Williams itself may have repurchas= ed=20 some of the electricity it sold earlier. But trading companies closely guar= d=20 their positions.=20 This much can be said with certainty: Electricity that AES sold for less th= an=20 5 cents per kilowatt-hour to Williams changed hands perhaps 10 times in the= =20 wholesale market and emerged at times in recent months with a price tag for= =20 consumers that was 300 percent higher.=20 Williams' trading profits increased by 523 percent in the first quarter thi= s=20 year. Advance sales All this buying and selling creates curious confluences.=20 In their attempt to deflect criticism over high prices generating companie= s=20 such as Duke Energy -- operator of the South Bay Power Plant in Chula and= =20 others in the state -- frequently note that they sell most of their=20 electricity far in advance. But they acknowledge less often that their=20 trading units may also be buying power which could boost the company's=20 electricity inventory.=20 Duke was the fourth biggest electricity trader last year and cited its=20 trading activity as a prime contributor to its wholesale business profits= =20 which soared 324 percent in the first quarter to $348 million.=20 It is a company's power traders who frequently direct plant operators to=20 increase or decrease the generation of power in response to market=20 conditions.=20 Energy companies have little option but to turn to trading for profits. One= =20 of the better kept secrets of electrical deregulation and its promise of=20 competition is that there is remarkably little competition in the productio= n=20 side of the business.=20 For one thing electricity is a commodity power from one company is=20 indistinguishable from that generated by others.=20 More important nearly all modern plants generate power from turbines built= =20 by a handful of manufacturers. The result? Modern plants owned by different= =20 companies produce power at nearly identical cost.=20 The cost of power produced by modern plants is all within a mil=20 (one-thousandth of a dollar) said Michael Peevey an adviser to Gov. Gray= =20 Davis and former president of Southern California Edison.=20 So the extraction of profit in the electricity business relies much more on= =20 trading. Traders' profits rise when prices are volatile -- plunging or eve= n=20 better rising sharply. Little regulation But despite the obvious temptation to manipulate the market the burgeoning= =20 electricity trading business has remained largely unregulated.=20 The Federal Energy Regulatory Commission does require quarterly filings fro= m=20 energy traders but these often provide incomplete information or at least= =20 little that has been of concern to FERC.=20 In fact although the trading of electricity grew more than a hundredfold= =20 from 1996 to 2000 FERC has taken no major enforcement action against a=20 trader. After the onset of the California crisis last year FERC has acted= =20 once. That was against Williams which agreed to pay $8 million without=20 admitting guilt to resolve an allegation that it withheld supply to pump up= =20 prices.=20 FERC's record of enforcement in the area of power trading stands in contras= t=20 to a long list of enforcement actions within other markets taken by the=20 Securities Exchange Commission and the Commodity Futures Trading Commission= .=20 FERC has recently added staff to its market oversight operations. But Willi= am=20 Massey a FERC commissioner says the agency's effort is still inadequate.= =20 Electricity can be flipped stripped and chopped up Massey said. It's a= n=20 extraordinarily complicated market.=20 The sophisticated marketers and traders have simply moved past us. We're= =20 kind of horse and buggy in our approach and they're out there in rocket shi= ps=20 flying around ... The problem is that sophisticated traders don't necessari= ly=20 produce reasonable prices. They produce profits.=20 Before deregulation electricity trading was a low-key affair. Regulated=20 utilities dealt power back and forth on a reciprocal basis to fill=20 electricity shortfalls in their control areas. There was little trading for= =20 profit until the mid-1990s after federal legislation and FERC rulings open= ed=20 the market.=20 Major traders include large energy companies sister companies of=20 California's major utilities and Wall Street firms. Market volatility In many ways the trading of power is similar to that of other commodities.= =20 But there are important differences. Because it cannot be stored and its us= e=20 is so fundamental the price of electricity is the most volatile of all.=20 When supplies are tight a single supplier can rapidly raise prices to=20 budget-busting levels as evidenced by Duke Energy's recent admission that = it=20 charged California nearly $4000 for a megawatt-hour of power a quantity= =20 that probably sold hours earlier for one-tenth of that sum or less.=20 Wolak the Stanford economist and state Sen. Joseph Dunn D-Garden Grove= =20 who is investigating the state power market say trading allows companies t= o=20 collude under the guise of competition. Instead of wringing out lowest cost= s=20 the wholesale trading market serves to raise prices they say.=20 As I trade to you and you trade to me we communicate to each other what= =20 price we would like to get said Wolak. It's not collusive. It's just=20 communicating price.=20 Mark Palmer a spokesman for Enron the nation's biggest power trader said= =20 California's problem is not the result of trading.=20 It's a result of shortages Palmer said.=20 Underscoring its emphasis on trading Enron's new headquarters tower in=20 downtown Houston rises from a six-story block of new trading floors=20 including expanded space for electricity trading.=20 Enron also pioneered trading in cyberspace and its Enron Online site claims= =20 to be the most active computer-based trading market.=20 The Houston company argues that consumers won't fully benefit from power=20 trading and deregulation until they have greater choice in choosing their= =20 power supplier. And the company says FERC has not done enough to open acces= s=20 to transmission lines which would allow traders to move power around the= =20 country. To that end Enron has lobbied hard for President Bush's plan for = a=20 national electricity grid.=20 Palmer says the notion that the price of electricity rises each time it is= =20 traded is mistaken.=20 The market is always looking for the real price of a commodity Palmer=20 said.=20 Dunn the California state senator says his investigation found a differen= t=20 function for trading. At a time when supply barely meets or falls short of= =20 demand he noted companies with electricity to sell have to worry only abo= ut=20 how high to set their price.=20 The trader is a pawn in the generator's game to drive up prices said Dun= n.=20 Trading develops a level of trust. You my alleged competitor will bid in= =20 the same patterns and I will respond not in a competitive pattern but in a= =20 complimentary pattern.=20 The state senator said his investigation found evidence that on several day= s=20 energy companies appeared to test their ability to drive prices up without= =20 being undercut by competitors.=20 This ability to drive up prices without competitive consequence is a key te= st=20 of market power the technical term for manipulation or price fixing.=20 But Dunn also conceded that antitrust violations can be hard to prove in=20 court. He suggested that even if the trading behavior falls short of=20 antitrust violations it remains anti-competitive and devastating for the= =20 California economy.=20 To Harry Trebing a utility industry expert and professor emeritus at=20 Michigan State University wholesale electricity trading is reminiscent of= =20 what took place in the 1920s and early '30s. Back then utility companies= =20 created complex networks of holding companies that traded stock among=20 themselves driving up prices in the process.=20 Undoing that scheme was a focus of President Franklin Roosevelt's=20 administration. Congress ended up barring national power companies and=20 tightening regulation of utilities in an effort to counteract their tenden= cy=20 to create markets that work only for insiders.=20 The broad goals of trading are the same Trebing said.=20 The goal is to maximize profits through raising prices.=20 Daily energy costs for state fall in past weeks=20 By Ed Mendel=20 UNION-TRIBUNE STAFF WRITER=20 June 6 2001=20 SACRAMENTO -- In some of the first good news of the electricity crisis the= =20 Davis administration said yesterday that the daily cost of power purchased = by=20 the state for utility customers has dropped in recent weeks.=20 The price-drop news comes after an announcement that Californians conserved= =20 more energy than expected last month 11 percent and amid Davis=20 administration optimism that the Legislature may finally begin to move on a= =20 plan to keep Southern California Edison out of bankruptcy.=20 The developments if they turn out to be a trend and not temporary could b= e=20 among the first signs that Gov. Gray Davis' plan to end the electricity=20 crisis is beginning to work. But the administration isn't saying that.=20 We have had a few good days here lately said S. David Freeman a Davis= =20 power adviser. I don't think that I want to project.=20 Some power-market watchers began to speculate last month that prices may ha= ve=20 peaked earlier this year. Platts an energy information service said=20 yesterday that spot prices for the natural gas used by power plants are=20 falling this month.=20 The governor's press secretary Steve Maviglio told reporters yesterday th= at=20 the daily amount spent on power is now well below $50 million which was= =20 the average cost earlier this year.=20 A 12-day gap in the most recent notice to the Legislature that another $500= =20 million increment will be spent on power suggests that the daily average=20 during the last two weeks may have dropped down around $42 million.=20 Oscar Hidalgo a spokesman for the state power purchasing agency said that= =20 the average cost of power was under $40 million during the first four days = of=20 this month.=20 Maviglio attributed the lower cost to conservation the phasing in of cheap= er=20 long-term power contracts fewer power plants off-line for maintenance and= =20 cooler weather.=20 However he said The average cost is still way over what we paid last=20 year.=20 There was widespread skepticism in late April when the governor's consultan= ts=20 predicted that the $346 per megawatt-hour average paid by the state for=20 non-contracted power from April through June would drop to an average of $1= 95=20 from July through September.=20 We are still very comfortable with the projection that Mr. Fichera and=20 company estimated Maviglio said referring to Joseph Fichera of Saber=20 Partners in New York.=20 During a briefing on May 21 Fichera told reporters that the amount of powe= r=20 that the state would obtain under long-term contracts for May was expected = to=20 be about 43 percent of the total required the so-called net short.=20 Fichera said contracts already signed were expected to cover 66 percent of= =20 the net short in June 48 percent in July and 42 percent in August. He sai= d=20 contracts that had been agreed on in principle could increase those amounts= =20 to 73 percent in June 67 percent in July and 60 percent in August.=20 We are still on target. There are risks Fichera said yesterday among th= em=20 extended hot weather and power plant outages. No one is popping the=20 champagne corks until Sept. 30.=20 The governor's consultants based their forecast of power demand this summer= =20 on an estimate that Californians will reduce their electricity use by 7=20 percent.=20 The 11 percent reduction last month as compared to May of last year came= =20 before the sticker shock of rate hikes that begin this month for customers = of=20 Edison and Pacific Gas and Electric. And a $35 million ad campaign urging= =20 conservation has not hit full stride.=20 Maviglio said the administration plans to release some detailed information= =20 on Monday about the roughly $8 billion the state has spent buying power. Th= e=20 general fund will be repaid by a bond of up to $13.4 billion that ratepayer= s=20 will pay off over 15 years.=20 Legislative leaders have demanded detailed information about power purchase= s=20 before proceeding with the Edison plan. Assembly Democrats are working on a= =20 plan that de-emphasizes state purchase of the Edison transmission system an= d=20 would put most of the burden for paying off Edison's debt on businesses and= =20 large users not residences. Five tiers sought in proposed rate boost=20 Conservation would be promoted SDG&E says By Karen Kucher=20 UNION-TRIBUNE STAFF WRITER=20 June 6 2001=20 A proposed rate increase for SDG&E customers to cover the high cost of=20 electricity should be imposed in five tiers to encourage conservation the= =20 company is advising state utility regulators.=20 The more electricity a customer uses the higher the rate would be.=20 SDG&E needs to raise its rates to bring in an additional $502 million=20 annually to pay the state for power purchases.=20 The state Public Utilities Commission is expected to rule on San Diego Gas = &=20 Electric's rate-increase proposal June 28.=20 The rate changes would remove a cap that has shielded most SDG&E customers= =20 from rising electricity prices for a year. The cap enacted by state=20 lawmakers in September 2000 and retroactive to June 2000 set rates at 6.5= =20 cents per kilowatt-hour.=20 Higher rates would mean the average SDG&E residential and small-business=20 customer's electricity bills would go up by 18 percent. Large commercial=20 users' bills would average 29 percent more.=20 Public hearings on the issue will be held next Monday and Tuesday in San=20 Diego El Cajon Escondido and San Clemente. These sessions will focus on= =20 small-business and residential consumers. Hearings on large commercial user= s=20 were held last month.=20 Earlier this year the PUC decided to allow the state's two largest=20 utilities Pacific Gas and Electric and Southern California Edison to char= ge=20 customers an extra $5.7 billion annually for electricity.=20 The state Department of Water Resources which has been buying power for=20 SDG&E customers since February asked SDG&E to generate a total of $915=20 million annually to cover the cost of electricity purchases.=20 With the proposed rate increases SDG&E could do that.=20 Large commercial customers would pay about 30 percent of the overall increa= se=20 and residential and small-business customers would pay about 70 percent sa= id=20 Ed Van Herik a spokesman for the utility company.=20 If the increase can be tiered as many as 60 percent of residential custome= rs=20 will see no rate increase if their electricity usage remains the same Van= =20 Herik said.=20 But customers who use more than 130 percent of their baseline -- considered= =20 the minimum amount of electricity needed by a household -- will be billed a= t=20 increasingly higher rates.=20 Residential and small-business customers who use a lot of electricity could= =20 pay as much as 17.89 cents per kilowatt hour for some power they consume.= =20 Consumer advocate Michael Shames said he is concerned the utility's proposa= l=20 does not spread the increases evenly among different types of users. He als= o=20 called for more scrutiny of the state's request.=20 People should tell PUC officials that this increase should not be a carte= =20 blanche or blank check approval said Shames the head of Utility Consumer= s'=20 Action Network. The PUC needs to ensure that the rate increase requested b= y=20 the (state) is reasonable.=20 The public hearings are scheduled for:=20 ?Monday 1 p.m. San Diego Concourse Copper Room 200 C St. San Diego.=20 ?Monday 7 p.m. El Cajon Community Center 195 E. Douglas Ave. El Cajon.= =20 ?Tuesday 1 p.m. Country Inn Hotel 35 Via Pico Plaza San Clemente.=20 ?Tuesday 7 p.m. Center for the Arts 340 N. Escondido Blvd. Escondido.= =20 Port budget large but power bills loom=20 Slowing economy also cause for worry By Ronald W. Powell=20 UNION-TRIBUNE STAFF WRITER=20 June 6 2001=20 The rock is rolling financially but there are indications that the blues= =20 lurk on the horizon.=20 Officials of the San Diego Unified Port District -- headquartered in a=20 block-shaped building some employees call the rock -- are happy with a=20 projected 2001-2002 budget that is 5.1 percent larger than the current one.= =20 Total revenue is expected to reach $208.7 million $10.2 million above what= =20 is expected in the fiscal year that ends June 30.=20 Port commissioners gave preliminary approval to the budget yesterday and ar= e=20 scheduled to take a final vote July 10.=20 But a slowing economy and surging electric bills are causes for concern.=20 Electricity costs are expected to rise from $5 million to $8.2 million in t= he=20 coming fiscal year.=20 As far as trends we see a continuation of the growth we've experienced ov= er=20 the past five years said Bruce Hollingsworth the port's treasurer. But= =20 our percentage of growth will not rise as sharply.=20 Port revenues have grown steadily since the 1997-1998 fiscal year when $16= 3=20 million was generated.=20 The proposed budget calls for adding 24 employees to the port's 730-member= =20 work force. New hires will include three Harbor Police officers 10 employe= es=20 in the aviation division and four in maritime services.=20 The port operates Lindbergh Field and administers nonmilitary tidelands alo= ng=20 San Diego Bay. It is landlord to more than 600 waterfront businesses and=20 operates two marine cargo terminals and one cruise ship terminal.=20 The budget calls for growth in each of the port's primary revenue centers:= =20 aviation real estate and maritime services.=20 Passenger and cargo activity at Lindbergh Field is expected to generate $90= .7=20 million or $5 million more than expected in the current year. Most of that= =20 increase is expected to come from parking-rate increases at the airport and= =20 at the port's long-term parking lot on Pacific Highway.=20 Rent from hotels and other businesses that are port tenants are expected to= =20 total $63.1 million up $1.8 million from the current budget.=20 Increases in cargo and cruise ship traffic are expected to boost maritime= =20 income by $2.7 million to a total of $18.4 million.=20 The port expects to spend $157 million on construction projects. They inclu= de=20 $8.5 million to relocate the General Services Department from Eighth Avenue= =20 and Harbor Drive in San Diego to National City and more than $5 million for= =20 paving and improvements at the 10th Avenue Marine Terminal.=20 Rent revenue could grow substantially in future years. Four hotel projects = on=20 port property have won approval or are seeking it.=20 Jim Bailey president of Manchester Resorts told commissioners yesterday= =20 that he expects to break ground on a second Hyatt tower of 750 rooms by Jun= e=20 26. Port officials said revenue from that hotel would bring in an additiona= l=20 $3.7 million a year. It is scheduled to open in the summer of 2003.=20 Hollingsworth the treasurer said that if all four hotels are built the po= rt=20 could receive as much as $15 million a year in new revenue.=20 Continuous use urged for planned power plant=20 Escondido facility originally proposed for peak demand By Jonathan Heller=20 UNION-TRIBUNE STAFF WRITER=20 June 6 2001=20 ESCONDIDO -- A proposed power plant in southwest Escondido that initially w= as=20 expected to run only during times of peak electricity demand probably will = be=20 allowed to run full time.=20 A state energy official who recommended approval of the plant yesterday has= =20 said the plant could operate as often as the state deems necessary.=20 The California Energy Commission was scheduled to vote on the project today= .=20 CalPeak Power of San Diego has asked the commission to approve a 49-megawat= t=20 plant on Enterprise Street near Vineyard Avenue. Referred to as a peaker= =20 plant such facilities typically are designed to supply energy only during= =20 times of peak demand.=20 The state limits the number of hours some plants can operate to keep=20 pollution at a minimum. A 44-megawatt peaker plant being built on West=20 Mission Avenue in Escondido by Ramco Inc. will be allowed to operate no mor= e=20 than 16 hours per day.=20 That plant is permitted to emit up to 5 parts per million of nitrogen oxide= =20 although its actual emissions are expected to be slightly lower said Dale= =20 Mesple a Ramco consultant. Nitrogen oxide is a component of smog.=20 The CalPeak plant if approved would be restricted to 2 parts per million = of=20 nitrogen oxide.=20 It was generally assumed that the CalPeak plant would operate under similar= =20 time restrictions as the Ramco plant. The potential for air pollution was= =20 among the chief concerns of residents who spoke at the City Council hearing= s=20 on the Ramco project and at the energy commission hearings about the CalPea= k=20 plant.=20 But under the terms of approval recommended by Energy Commission Chairman= =20 William Keese CalPeak's plant would be able to operate up to 8760 hours= =20 per year typically when the demand for electricity is high. That number= =20 equals 24 hours a day.=20 The actual number of hours would depend on the requirements of the state's= =20 Independent System Operator which manages the energy grid.=20 We certainly want to have the flexibility to run whenever we're needed= =20 said Mark Lyons CalPeak's development director. Exactly how often we will= =20 run is anybody's guess.=20 Escondido Councilwoman June Rady said she was frustrated by the possibility= =20 of the plant running full time. In Ramco's case the city and the county Ai= r=20 Pollution Control District made it clear how often the plant could operate.= =20 CalPeak chose to bypass the city's permitting process and went through the= =20 state Energy Commission which offers an expedited 21-day approval put in= =20 place by Gov. Gray Davis as an emergency measure.=20 I think Escondido has been absolutely ignored and there's a total lack of= =20 due process Rady said. It boils down to an issue of local control.=20 Although city officials objected to the commission pre-empting the city's= =20 land-use authority the commission maintained that Davis' order gave it the= =20 final say on this type of project.=20 If the commission gives final approval today the only remedy available to= =20 the city would be in court. At least three council members must vote to=20 initiate legal action.=20 Keese's recommended approval did take into account several city concerns=20 regarding landscaping. The CalPeak plant would be built near the entrance o= f=20 a planned high-tech business park and city officials were worried the=20 plant's appearance might hinder the ability to attract high-quality tenants= =20 to the park.=20 Mayor Lori Holt Pfeiler said she was not surprised by the commission's=20 recommendation.=20 I expected they would want to approve the project and that's why it was= =20 important for the city to weigh in with conditions we have in this=20 community Pfeiler said.=20 Rising energy prices threaten Poway troupe=20 By Brian E. Clark=20 UNION-TRIBUNE STAFF WRITER=20 June 6 2001=20 POWAY -- Rising electricity rates may extinguish the stage lights this summ= er=20 for the Poway Performing Arts Company.=20 I'm afraid that if SDG&E gets the price increase it's asking for -- from 6= .5=20 cents per kilowatt-hour to 8.9 cents -- that we'll go under said Kathy=20 McCafferty spokeswoman for the nonprofit theater.=20 The volunteer organization produces its plays in a building at a Poway Road= =20 shopping center. It held three fund-raising performances over the weekend= =20 but officials were uncertain yesterday how much money was raised.=20 The group is not affiliated with the Poway Performing Arts Center and has= =20 been in business for 20 years.=20 McCafferty said the group built up a $2000 surplus last summer before ener= gy=20 prices began to surge.=20 That $2000 was a big reserve for us she said. It seemed like a ton of= =20 money but boy it went fast. And we're really energy-dependent. Our light= s=20 use a lot of power. And we're in Poway on the second floor of our building.= =20 It gets hot here and we have to use air conditioning.=20 But McCafferty acknowledged that the cost of power isn't the group's only= =20 problem.=20 In a recent letter to backers President Nan Katona said the organization= =20 also needs new blood to keep operating.=20 The truth is that lack of funding is just a symptom of the deeper problem= =20 which is lack of community support she wrote. Ironically audiences and= =20 reviewers recognize the Poway Performing Arts Company as one of the premier= =20 community arts theaters in San Diego.=20 Katona said some new volunteers had stepped forward to take leadership role= s=20 in the theater company since she wrote her letter last month. But she said= =20 rising electricity prices could still bring the group down.=20 If our energy bills double or triple we could be in dire straits she=20 said. It could push us over the edge financially.=20 McCafferty said it would be difficult for the theater to cut costs.=20 We can't run a much leaner operation she said. If our power prices go u= p=20 again we may still be forced out of business.=20 The theater is at 13250 Poway Road in the Lively Shopping Center. For more= =20 information call (858) 679-8085.=20 Fair to use generators for midway attractions=20 By Michael Burge=20 UNION-TRIBUNE STAFF WRITER=20 June 6 2001=20 DEL MAR -- The Del Mar Fair will generate its own electricity for thrill=20 rides on the midway this year instead of using energy from SDG&E.=20 In case there are planned or unplanned outages we still will be operating= =20 fairgrounds General Manager Timothy J. Fennell said.=20 Fennell decided to put the midway on generators because he didn't want the= =20 fairgrounds pulling power from the grid while county residents are coping= =20 with rolling blackouts at home and at work he said.=20 And the fair does not want to take a chance that a rolling blackout will=20 leave some people stranded in rides high above the grounds forcing an=20 evacuation.=20 The fairgrounds has been told it is exempt from rolling blackouts but rath= er=20 than take such a risk it will rent 13 diesel-fuel generators and produce=20 electricity on the midway. The rest of the fairgrounds will use power from= =20 San Diego Gas & Electric Co.=20 Fairgrounds operations manager Larry Baumann estimated it would cost the=20 fairgrounds $20000 more to generate its own electricity than to buy it fro= m=20 SDG&E.=20 Midway manager Donna Ruhm said it will be worth it.=20 Rides that require evacuation have to have backup power and they do Ruhm= =20 said. Now our service won't be interrupted.=20 It is not unusual for carnivals to generate their own power and the=20 fairgrounds has done so in the past. Fair officials removed the generators = 10=20 to 15 years ago to reduce noise on the midway.=20 The fair opens June 15 and ends July 4.=20 While the rest of the fairgrounds is on the SDG&E grid Baumann said backup= =20 generators can kick in during a typical 60-or 90-minute blackout allowing= =20 the fair to operate without serious difficulty. Those generators are not=20 linked to the midway.=20 All the generators are licensed by the state and meet emission standards= =20 fair officials said so they do not expect the noise and odor to be=20 excessive.=20 The fairgrounds is taking the precaution of providing its own power despite= =20 the fact that it probably will not go dark during a rolling blackout.=20 SDG&E has assured me that .?.?. the fairgrounds and the racetrack will not= =20 be on the curtailment (blackout) list during the fair and the races said= =20 Del Mar Fire Chief Jack Gosney.=20 The Del Mar Thoroughbred racing season begins July 18 and ends Sept. 5.=20 Gosney said SDG&E told him earlier this year that the fairgrounds was not= =20 subject to a forced outage because it shared a circuit with the Del Mar Fir= e=20 Station which is a 911 dispatch center and exempt from a blackout. But he= =20 said recent research showed that the fairgrounds is on a separate circuit.= =20 Nonetheless Gosney said SDG&E is exempting the fairgrounds and racetrack= =20 during the busy summer season.=20 The fairgrounds paid $137152.95 for its electricity usage from March 12 to= =20 April 10. It paid $51845.39 for electricity during the same period last ye= ar. ?=20 Wednesday June 6 2001=20 'Hi My Name Isn't Justice Honey' and Shame on Lockyer=20 By TOM G. PALMER ?????Here's what California Atty. Gen. Bill Lockyer said at a press=20 conference about Enron Corp. Chairman Kenneth Lay: I would love to=20 personally escort Lay to an 8-by-10 cell that he could share with a tattooe= d=20 dude who says 'Hi my name is Spike honey.'=20 ?????Here's why Lockyer should be removed from his office of public trust:= =20 First because as the chief law enforcement officer of the largest state in= =20 the nation he not only has admitted that rape is a regular feature of the= =20 state's prison system but also that he considers rape a part of the=20 punishment he can inflict on others.=20 ?????Second because he has publicly stated that he would like to personall= y=20 arrange the rape of a Texas businessman who has not even been charged with= =20 any illegal behavior.=20 ?????Lockyer's remarks reveal him to be an authoritarian thug someone whol= ly=20 unsuited to holding an office of public trust.=20 ?????But his remarks do have one positive merit: They tell us what criminal= =20 penalties really entail.=20 ?????Contrary to some depictions of prisons as country clubs they are=20 violent and terrible places. More and more politicians propose criminal=20 sanctions for more and more alleged misdeeds and as a result ever more kin= ds=20 of behavior are sanctioned by criminal penalties perhaps now even selling= =20 electricity. Those found guilty of such crimes are put into cages where th= ey=20 are deprived of their liberty and dignity and as Lockyer so clearly=20 acknowledged raped and brutalized. What's worse Lockyer has indicated tha= t=20 he believes that rape is an appropriate part of the system of punishments h= e=20 administers.=20 ?????Should it matter that Lay is a businessman? Imagine the outcry if the= =20 head of Enron were female. What would Lockyer's fellow Democrats have said = to=20 that?=20 ?????Should it matter that Lay is chairman of an electricity generator? Doe= s=20 the nature of his business justify threats to escort him to his own rape?= =20 Lockyer told the Los Angeles Times that he had singled out Enron's chairman= =20 because the Houston-based company is the world's largest energy trader.=20 ?????So apparently singling out a man for a heinous threat is OK because he= 's=20 the chairman of the world's largest energy trading company. That's accordin= g=20 to the man who as a state senator sponsored California's 1984 hate-crimes= =20 law. Evidently the crusader against intimidation on the basis of race=20 religion and sexual orientation feels no hesitation at all about intimidati= ng=20 someone and threatening him with the brutal use of physical force simply=20 because he heads the world's largest energy trading company.=20 ?????Lockyer and Gov. Gray Davis seem to think that the best way to keep th= e=20 lights on is to threaten electricity producers with brute force rather tha= n=20 to offer to pay competitive rates in competitive markets. Are energy=20 producers to blame for California's energy problems? No. Bad policies=20 including rigid controls on retail prices of electricity are the cause of= =20 the problem not the people who generate energy. Scapegoating producers and= =20 threatening them with violence is an old ploy of authoritarians. California= ns=20 should not stand for it.=20 ?????An Enron spokesman said that Lockyer's chilling stated desire to arran= ge=20 the rape of Lay does not merit a response. The spokesman is wrong. Lockyer'= s=20 remarks merit public disgrace and removal from office. After all rape is n= ot=20 a form of legal justice in America--is it?=20 - - - Tom G. Palmer Is a Senior Fellow at the Cato Institute in Washington. E-mai= l:=20 [email protected] Copyright 2001 Los Angeles Times=20 California Metro Desk=20 U.S. Probes Alleged Pact Not to Build New Plants Power: Justice officials= =20 focus on Southland operations of two firms which deny wrongdoing. MYRON LEVIN NANCY RIVERA BROOKS ?=20 06/06/2001=20 Los Angeles Times=20 Home Edition=20 Page B-1=20 Copyright 2001 / The Times Mirror Company=20 The U.S. Department of Justice has launched an investigation into whether t= wo=20 companies that control a large swath of Southern California 's electricity= =20 supply agreed to limit power plant construction potentially hindering=20 crucial energy production according to federal records and interviews.=20 The civil antitrust probe of Williams Energy Services and AES Southland=20 represents the Justice Department's first foray into the activities of ener= gy=20 suppliers who have reaped huge profits in California 's price-shocked marke= t.=20 AES disclosed the investigation which began last month in a filing with t= he=20 Securities and Exchange Commission on Tuesday. In its papers AES said the= =20 Justice Department is focusing on whether its agreement with Williams could= =20 constrain future power plant construction in Southern California .=20 The investigation comes at a time when the state is scrambling to get new= =20 generators built and running to avoid blackouts and economic problems.=20 The government alleges that AES and Williams agreed to limit the expansion = or=20 construction of new power plants near three facilities purchased by AES in= =20 1998 from Southern California Edison under the state's new deregulation pla= n.=20 The plants--in Long Beach Huntington Beach and Redondo Beach--are owned by= =20 AES but the electricity is sold by Williams. Under a 3-year-old deal know= n=20 as a tolling agreement Williams essentially rents out the capacity of the= =20 plants for annual payments to AES. Williams supplies natural gas to fire th= e=20 plants and sells the electricity under long-term contracts and in the costl= y=20 spot market.=20 Williams and AES have similar tolling agreements at plants in Pennsylvania= =20 and New Jersey. However AES spokesman Aaron Thomas said the Justice=20 Department's investigative requests have focused only on agreements between= =20 Williams and AES in Southern California .=20 Thomas would say only that the agreement at the center of the investigation= =20 is simply a delineation of how expansion or repowerings are done at the=20 facilities.=20 The three plants have a combined capacity of more than 3900 megawatts=20 enough to supply about 3 million homes. This summer AES is bringing anothe= r=20 450 megawatts on line by reactivating two mothballed generators in Huntingt= on=20 Beach.=20 Paula Hall-Collins a spokeswoman for Tulsa-based Williams Cos. said she= =20 believes that the investigation is unrelated to a recent inquiry by the=20 Federal Energy Regulatory Commission into whether AES and Williams=20 unnecessarily shut down plants to jack up prices. A portion of that=20 investigation was settled in April when Williams without admitting any=20 wrongdoing agreed to pay about $8 million.=20 We've always maintained that we've operated within the law and we're=20 certain the investigation by the DOJ will find we are operating legally= =20 Hall-Collins said.=20 Williams and AES are among the power plant owners and marketers that have= =20 been lambasted by Gov. Gray Davis because of gold-plated electricity prices= =20 that have pushed the state's biggest utilities to the edge of ruin and are= =20 steadily draining the state's budget surplus.=20 State officials are asking FERC to revoke the rights of AES and Williams to= =20 sell electricity at whatever price the market will bear. That right was=20 granted for three years beginning in 1998 by federal regulators when=20 California 's $28-billion electricity market was opened to competition.=20 Under that plan the rights of AES and Williams to sell into the market are= =20 the first to come up for renewal.=20 AES Southland and Williams Energy Services are both arms of large energy=20 companies--AES Corp. of Arlington Va. and Williams Cos. of Tulsa Okla. California Metro Desk=20 Natural Gas Power Prices Drop Sharply Energy: More conservation mild=20 weather are among factors keeping costs down experts say. RICARDO ALONSO-ZALDIVAR NANCY VOGEL ?=20 06/06/2001=20 Los Angeles Times=20 Home Edition=20 Page B-1=20 Copyright 2001 / The Times Mirror Company=20 WASHINGTON -- The wholesale prices of electricity and natural gas in=20 California have fallen sharply in recent weeks and experts said Tuesday th= at=20 the relief could be the harbinger of an energy turnaround.=20 Or it may be just a blip.=20 In the last couple of weeks California power prices have plunged to the=20 lowest levels since April 2000 traders say with electricity selling on so= me=20 days for less than $100 per megawatt-hour.=20 At night when demand slackens power sometimes sells for less than $20 per= =20 megawatt-hour. That is reminiscent of the days before prices went haywire= =20 last summer.=20 It is a drastically different scenario than the $500 to $800 the state paid= =20 during a spate of hot weather last month.=20 Meanwhile wholesale natural gas prices at a bellwether pipeline junction o= n=20 the Southern California -Arizona border dipped last week to their lowest=20 levels since November according to a publication that tracks the industry.= =20 Separately Southern California Gas Co. and Pacific Gas & Electric Co.=20 reported June rate cuts for their residential gas customers of 16% and 38%= =20 respectively.=20 Experts credited a combination of conservation mild weather a burst of=20 increased hydroelectric generation and lower natural gas prices for the dro= p=20 in electricity costs.=20 Conservation is starting to worry the generators which is nice to see= =20 said Severin Borenstein director of the University of California Energy=20 Institute in Berkeley. Californians used 11% less energy last month than in= =20 May 2000 according to the state Energy Commission.=20 I'm worried that if we don't push harder on conservation [prices] won't= =20 stay down Borenstein added.=20 On the natural gas side experts said the price decline is due to replenish= ed=20 storage within California a nationwide drop in the cost of the fuel and= =20 easing demand from power plants.=20 The number of shippers competing to get natural gas to the state has also= =20 increased with the expiration of a controversial contract on the El Paso= =20 pipeline system last week.=20 But economists were reluctant to make sweeping predictions based on the=20 latest indicators.=20 It's hard to draw specific conclusions said Bruce Henning who tracks th= e=20 natural gas markets for Energy and Environmental Analysis Inc. an Arlingto= n=20 Va. consulting firm.=20 How the summer turns out depends on the weather in the state Henning said= =20 adding The weather represents the balance in the Southern California=20 market.=20 Natural gas fuels most California power plants. With wholesale prices=20 recently averaging three to four times the rates charged elsewhere in the= =20 country state and federal officials have despaired of chances for=20 controlling electricity costs.=20 Last Friday however the daily price for immediate delivery of natural gas= =20 in Topock Ariz. a pipeline junction near the California border dipped to= =20 $7.85 per million British thermal units.=20 According to Natural Gas Week it was the first time since mid-November tha= t=20 the price at that location had fallen below $8 per million BTUs. One millio= n=20 BTUs is what a typical Southern California home uses in five or six days.= =20 Considered a bellwether for other pipeline systems serving California the= =20 Topock price reached a record $56.54 per million BTUs on Dec. 8. It stood a= t=20 $9.36 per million BTUs at the close of business Tuesday still below recent= =20 weekly averages.=20 Other industry publications have also picked up signals of price declines.= =20 Platts the energy information division of McGraw-Hill Cos. reported Tuesd= ay=20 that the price for monthly gas delivery contracts to California fell 22% in= =20 June following a nationwide trend.=20 But Henning said the drop in California prices is attributable to both lowe= r=20 prices around the country and a decline in the high markups for shipping ga= s=20 to California . Those markups which far exceed the cost of transporting ga= s=20 have drawn the attention of state and federal investigators.=20 Henning said the markups are declining as depleted storage levels in=20 California are replenished. Storage levels have been filling very rapidly= =20 and that fact is reflected in prices coming down he said.=20 The link between natural gas and electricity prices is a hotly debated=20 subject. Some experts say high-priced natural gas is driving up the cost of= =20 electricity . Others believe that record prices for power are raising the= =20 prices that generators are willing to pay for their fuel.=20 Electricity prices that range from $20 to $200 per megawatt-hour--instead o= f=20 the $150 to $500 per megawatt-hour paid in recent months--are great news fo= r=20 Gov. Gray Davis.=20 Average daily power prices in California for transactions through the=20 Automated Power Exchange have dropped from $149 per megawatt-hour last Frid= ay=20 to $110 per megawatt-hour Tuesday. The exchange is a private company that= =20 brings together electricity buyers and sellers and accounts for less than 1= 0%=20 of the state's market.=20 Davis spokesman Steve Maviglio said Tuesday that average daily power=20 purchases by the state have recently dipped below $50 million.=20 The state has sometimes had to pay more than $100 million a day since it=20 started buying power in January through the Department of Water Resources.= =20 The state stepped in because California 's two biggest utilities became too= =20 financially crippled to withstand the prices being charged by generators.= =20 Davis' plan to pay for past and future energy purchases with a $12.4-billio= n=20 bond issue hinges on an assumption that power prices will be driven down th= is=20 summer through long-term contracts conservation and the construction of ne= w=20 power plants.=20 UC Berkeley's Borenstein said conservation efforts have not gone far enough= .=20 You walk into most buildings and you still need a sweater he said. That= =20 ain't the way to hit the target.=20 If Californians conserved an additional 10% off their peak usage on hot=20 afternoons he said we could really break the backs of the generators we= =20 could really collapse the price.=20 Prices tend to skyrocket in California 's electricity market on hot=20 afternoons when demand soars and grid operators must scramble to purchase= =20 enough electricity . Cool weather which reduces demand for air conditionin= g=20 and conservation help keep the state from reaching such crisis situations.= =20 Borenstein said he believes generators are also asking less money for their= =20 electricity in part because of a federal order that took effect last month.= =20 The order limits the price power plant owners can charge when California 's= =20 supplies are strained.=20 Power sellers say there are more fundamental forces at work.=20 There's more supply relative to demand which is softening prices said= =20 Gary Ackerman executive director of the Western Power Trading Forum. The= =20 market is working and it's providing cheaper wholesale power more quickly= =20 than any regulatory scheme could ever do.=20 *=20 Times staff writer Dan Morain in Sacramento contributed to this story.=20 RELATED STORY=20 PG&E wins: The utility averted a $1-billion bill for power buys. B6=20 (BEGIN TEXT OF INFOBOX / INFOGRAPHIC)=20 A Blip or a Trend?=20 Daily natural gas prices at the California border with Arizona--considered = a=20 bellwether of the state's costs--have been declining in the last two weeks.= =20 *=20 Natural gas price per 1 million Btu=20 $9.36=20 Source: Natural Gas Week California Metro Desk=20 The State Utility Averts $1 Billion in Costs Courts: PG&E and Cal-ISO agree= =20 to recognize Department of Water Resources as purchaser of the power. TIM REITERMAN ?=20 06/06/2001=20 Los Angeles Times=20 Home Edition=20 Page B-6=20 Copyright 2001 / The Times Mirror Company=20 SAN FRANCISCO -- Pacific Gas & Electric Co. and the state's power grid=20 operator reached an agreement Tuesday that insulated PG&E at least=20 temporarily from more than $1 billion in power purchases the state made for= =20 its customers.=20 The California Independent System Operator sent $1.26 billion in invoices t= o=20 the utility for power purchases by the state Department of Water Resources= =20 for PG&E customers from January through March.=20 But the utility contended in Bankruptcy Court proceedings that it was not= =20 liable for such purchases and that continued purchases would cause annual= =20 losses of $4 billion.=20 After arguments before Judge Dennis Montali PG&E and Cal-ISO agreed that t= he=20 Department of Water Resources not PG&E purchased the power. Cal-ISO had= =20 argued that it was making the purchases on PG&E's behalf.=20 PG&E wants to be a utility and have obligations to serve customers but th= ey=20 don't want to pay for it Cal-ISO general counsel Charles Robinson said=20 later.=20 If PG&E refuses to pay the invoices Robinson said Cal-ISO will send the= =20 bills to the Department of Water Resources and officials there can decide= =20 whether to pursue claims in Bankruptcy Court. A spokesman for department= =20 which has authorization to sell $13 billion in bonds for power purchases= =20 said the agency will have no comment until the matter can be studied.=20 State agencies have stayed out of the bankruptcy proceedings hoping to=20 preserve their immunity from suits in federal court.=20 The agreement will be submitted for Montali's approval Monday but the judg= e=20 said it would not be binding on the department because no one represented t= he=20 agency in court.=20 PG&E's own production and contracts provide the majority of the power for i= ts=20 customers. But state legislation adopted this year allows the department to= =20 secure power contracts to serve customers of ailing utilities. When a=20 shortage threatens the power grid the department purchases additional powe= r=20 through Cal-ISO on the spot electricity market.=20 PG&E filed for Chapter 11 protection from creditors on April 6 saying it w= as=20 $9 billion in debt.=20 Dramatic drop in cost of electricity=20 LOWER BILLS: Cheaper fuel milder weather credited=20 David Lazarus Chronicle Staff Writer Wednesday June 6 2001=20 2001 San Francisco Chronicle=20 URL: .DTL=20 California electricity prices have plunged unexpectedly to their lowest lev= el=20 in more than a year partly as the result of a simultaneous drop in prices= =20 for natural gas which fuels most power plants.=20 Make no mistake: Gas and electricity prices could surge upward again in=20 months ahead.=20 But for the first time since California's energy markets went haywire last= =20 summer industry experts are beginning to ask whether the state finally may= =20 have turned a corner in its battle with runaway power costs.=20 California is not yet out of the woods said Kelley Doolan who tracks=20 natural gas prices for energy market researcher Platts. But this is a very= =20 significant decrease in costs.=20 Along with lower gas prices the decline in electricity costs was attribute= d=20 by state and industry officials to milder weather which reduces demand for= =20 power. They also credited recent conservation efforts by consumers and=20 better-than-expected runoff at dams for hydroelectric plants.=20 Gary Ackerman executive director of the Western Power Trading Forum an=20 energy-industry association said these factors came together to produce th= e=20 lowest wholesale electricity prices since April 2000.=20 Electricity on the spot market could have been purchased yesterday for as= =20 little as $50 per megawatt hour he noted compared with more than $500=20 earlier this year.=20 If the weather stays this way we could have reasonable prices all summer= =20 Ackerman said. We may also have fewer blackouts.=20 It is tempting for Californians to be suspicious of virtually any swing in= =20 energy prices. If power companies manipulated prices on the way up as=20 critics have alleged might they not be up to some trick as prices head in= =20 the opposite direction?=20 Nettie Hoge executive director of The Utility Reform Network in San=20 Francisco speculated that generators are allowing electricity prices to fa= ll=20 so they can discourage federal regulators from taking a more active role in= =20 the dysfunctional California market.=20 They're trying to take the heat off she said.=20 Others cautioned that the lower prices may be nothing more than a statistic= al=20 blip.=20 This was just one month's decline said Michael Shames executive directo= r=20 of the Utility Consumers' Action Network in San Diego. We really have to s= ee=20 how this plays out in the future.=20 Steve Maviglio a spokesman for Gov. Gray Davis said the governor was very= =20 encouraged by the lower energy prices. Davis announced Sunday that=20 California's power use was down 11 percent last month from a year before.= =20 We're not there yet Maviglio said of whether an end to the state's power= =20 woes is in sight. But the trend is pointing in the right direction.=20 WHITE ELEPHANT Yet this sudden drop in energy prices does have a dark side: California cou= ld=20 end up with a huge white elephant after spending about $40 billion in publi= c=20 funds on long-term power contracts.=20 The logic behind the contracts which are at an average price of $69 per=20 megawatt hour over 10 years is that the state expected to pay below-market= =20 rates for electricity for a number of years before prices came down and=20 California found itself paying above-market rates.=20 If current trends continue though California will find itself paying=20 consistently above-market rates much sooner than expected making the long-= =20 term contracts a sweet deal for the same power companies that profited so= =20 handsomely during the state's darkest hours.=20 The contracts look really ugly right now said Shames at the Utility=20 Consumers' Action Network. They may be way overpriced.=20 Maviglio the governor's spokesman said it is too early to conclude that t= he=20 state did poorly negotiating dozens of long-term power contracts.=20 No one has a crystal ball on this he said.=20 CUSTOMERS' BILLS TO DROP In any case Pacific Gas and Electric Co. said yesterday that customers'=20 average gas bills will drop 26 percent this month to $26 and should stay ne= ar=20 that level all summer.=20 Platts which monitors average monthly spot prices found that the wholesal= e=20 price of gas at the California-Oregon border has tumbled nearly 42 percent= =20 since the beginning of May -- from $9.98 per million British thermal units = to=20 $5.81.=20 The wholesale gas price at the California-Arizona border fell 45 percent= =20 from $11.91 to $6.50. This compares with a 25 percent monthly decline in=20 average natural gas prices nationwide.=20 However California gas prices are still about 50 percent higher than they= =20 were a year ago whereas national prices are now below year-ago levels for= =20 the first time since last spring.=20 While cooler weather nationwide helped push gas prices down overall Doolan= =20 attributed the especially steep drop in California to a commensurate surge = in=20 prices last month related to fears of a long hot summer of rolling=20 blackouts.=20 You had state officials all but promising rolling blackouts this summer = he=20 said. That created enormous demand for electricity generation.=20 What has changed is that we've had weeks of mild weather Doolan observed= .=20 The electricity generators have not come out of the woodwork buying up all= =20 the gas.=20 This allowed utilities like PG&E to beef up gas inventories which eased=20 demand and resulted in substantially lower prices he said.=20 'BACK ON TRACK'=20 We're back on track to be completely full for winter said Staci Homrig = a=20 PG&E spokeswoman. That's a very good thing.=20 Gas prices historically dip in the spring and summer and then rise again in= =20 the winter. PG&E is forecasting that customers' average gas bills could ris= e=20 to as high as $75 in December if current trends continue.=20 However the precipitous drop in gas prices in recent weeks suggests that= =20 California's unusually high costs at last may be abating.=20 Individual power companies so far are reluctant to speculate on whether the= =20 drop in gas prices will have a lasting effect on electricity costs.=20 E-mail David Lazarus at [email protected].=20 2001 San Francisco Chronicle ? Page?A - 1=20 San Jose council gives green light to generating plant=20 VOTE REVERSAL: Officials pressured to OK project=20 Marshall Wilson Chronicle Staff Writer Wednesday June 6 2001=20 2001 San Francisco Chronicle=20 URL: .DTL=20 In a clear sign that the political landscape has shifted because of the=20 state's power crisis the San Jose City Council gave a green light yesterda= y=20 for construction of a generating plant it had unanimously opposed in=20 November.=20 Yesterday's 10-to-1 vote came after months of mounting pressure for the cit= y=20 to reverse course and approve the controversial 600-megawatt Calpine plant = at=20 Coyote Valley.=20 That pressure -- increased by the occasional rolling blackout -- has come= =20 from nearly every corner of the state from elected officials to high-tech= =20 businesses and labor unions worried the power crisis will drain away jobs= =20 ruin the economy and lead to voter backlash over skyrocketing energy bills.= =20 Even the local branch of the NAACP and environmentalists pushed the council= =20 to approve the Calpine proposal -- despite overwhelming opposition from the= =20 plant's neighbors.=20 Council members did not hide their disdain yesterday for being forced to=20 reconsider their opposition to the so-called Metcalf Energy Center.=20 I'm holding my nose to vote for this thing said Councilwoman Linda=20 LeZotte.=20 I'm just as unhappy as everybody else Vice Mayor George Shirakawa said. = I=20 feel like no matter what happens we can't win.=20 GOVERNOR OFFERED HIS SUPPORT After the council's solid opposition in November Calpine appealed to the= =20 California Energy Commission which has the final say. The controversial=20 plant then received a huge boost in April when Gov. Gray Davis threw his=20 support behind it.=20 San Jose officials conceded yesterday that the energy commission was likely= =20 to override their opposition and grant approval within a few weeks. They sa= id=20 the commission's likely approval was stripping them of their power to decid= e=20 local land-use issues.=20 What I think has happened . . . is the governor and the Legislature at the= =20 state level have taken this out of our hands said Councilwoman Pat Dando.= =20 I don't think there's any chance at all the California Energy Commission i= s=20 going to turn down the Metcalf Energy Center Councilman Chuck Reed said.= =20 CONSTRUCTION MAY BEGIN SOON If given the go-ahead by the state Calpine could begin construction as ear= ly=20 as next month. The natural-gas fired plant would generate electricity by=20 mid-2003 company spokesman Kenneth Arbeu said.=20 At the urging of Mayor Ron Gonzales the council yesterday approved a new= =20 cooperation agreement with Calpine. The vote with Councilman Forrest=20 Williams casting the lone nay is preliminary while a final vote that is=20 scheduled for June 26.=20 Gonzales argued that the agreement did not amount to a flip-flop because it= =20 differs from what Calpine proposed in November.=20 The agreement approved by the council calls for increased monitoring of air= =20 pollution the use of treated wastewater to cool the plant which will redu= ce=20 discharges into San Francisco Bay and a $6.5 million community benefits= =20 package with the bulk going toward parkland acquisition Gonzales said.=20 This council has not changed its decision he said. What we've done is= =20 change the facility.=20 Critics incensed that the city was buckling to outside pressure vowed to= =20 change the council at the next election.=20 CONCERNS OVER HEALTH RISKS They raised concerns that boiled wastewater steam wafting over their homes= =20 from Calpine's plant could pose health risks. Jona Denz-Hamilton said more= =20 controls are needed to ensure the safety of neighbors like herself and her= =20 family and argued that new cleaner-burning technologies should be installe= d=20 at the plant.=20 It's too great of a risk she said.=20 Other critics said the state's energy woes will be solved and largely=20 forgotten by the time the plant opens in two years while the Santa Teresa= =20 neighborhood will be stuck with pollution for decades.=20 Approval seemed a given at the start of the more than three-hour hearing.= =20 Much of the afternoon's debate focused around plans to extend a pipeline fo= r=20 treated wastewater to the new plant.=20 Critics said Calpine was receiving a sweet deal by paying only $10 million = of=20 the $50 million cost of extending the pipeline. Several council members ask= ed=20 for a more detailed report into the financing plan before the final vote is= =20 taken June 26.=20 Chronicle staff writer Bill Workman contributed to this report.=20 E-mail Marshall Wilson at 2001 San Francisco Chronicle ? Page?A - 1=20 Developments in California's energy crisis=20 Wednesday June 6 2001=20 2001 Associated Press=20 URL:=20 tate1 053EDT0177.DTL=20 (06-06) 07:53 PDT (AP) --=20 Developments in California's energy crisis:=20 WEDNESDAY: * No power alerts Wednesday as reserves stay above 7 percent.=20 TUESDAY: * Gov. Gray Davis' administration says the state's electricity costs are=20 dropping substantially even as it asks state legislators for another=20 half-billion dollars for power purchases. That brings to $8.2 billion the= =20 amount the state is paying for electricity on behalf of three financially= =20 strapped utilities.=20 Spokesman Steve Maviglio says the cost to the state treasury has dropped in= =20 the last few weeks well below the $50 million dollars the state had been=20 paying on a typical day. He credits cooler weather conservation more powe= r=20 plants online and more long-term contracts with helping drive down the cost= .=20 * A state Senate committee agrees to issue subpoenas to eight out-of-state= =20 electricity generators demanding they hand over documents on bidding prici= ng=20 and other aspects of power sales in the state. The subpoenas would help a= =20 special Senate committee's investigation into whether the companies are=20 illegally profiteering from California's power crisis. The committee's=20 chairman says he expects the companies to resist setting the stage for a= =20 court battle.=20 * Oil giant Chevron threatens to cut gasoline production in California unle= ss=20 it is exempted from rolling blackouts. The San Francisco Chronicle says it= =20 has a copy of a letter sent Friday from Chevron chairman David O'Reilly to= =20 Davis. In the letter O'Reilly says the company will scale back gasoline=20 production at its Richmond and El Segundo plants operating those refinerie= s=20 only with power produced by generators at the sites.=20 * New U.S. Senate Majority Leader Tom Daschle D-S.D. supports Federal=20 Energy Regulatory Commission price caps. FERC must meet its obligation und= er=20 current law to ensure 'just and reasonable' prices for wholesale electricit= y=20 in the state of California. FERC has failed to meet this responsibility...= =20 Daschle says in a letter to Davis. Unless FERC acts soon Senator (Dianne)= =20 Feinstein's legislation should be taken up and passed to direct FERC to tak= e=20 action. I will support all necessary efforts to meet that goal.=20 * House Subcommittee on Energy Policy Natural Resources and Regulatory=20 Affairs Chairman Doug Ose R-Sacramento cites Electric Utility Week figure= s=20 that FERC's limited price caps helped cut California's power rates from $30= 0=20 to $108.47 per megawatt hour within an hour after taking effect last week.= =20 While he says more information is needed Ose uses the figures to tout his= =20 pending bill to impose the price caps around the clock and to all Western= =20 states.=20 * Pacific Gas & Electric Co. asks U.S. Bankruptcy Judge Dennis Montali to= =20 stop the manager of the state's power grid from buying electricity for=20 utility or charging it for any electricity bought after the utility filed f= or=20 bankruptcy on April 6. Separately the utility's creditors support its=20 request to the bankruptcy court to pay out $17.5 million in bonuses to the= =20 management team that guided the utility into bankruptcy.=20 * California Department of Water Resources reveals it is negotiating with= =20 municipal utilities to buy their surplus power. Department spokesman Oscar= =20 Hidalgo says talks began last week but no agreements are imminent.=20 * State lawmakers criticize a $3 million lobbying campaign by Southern=20 California Edison. The utility is telephoning shareholders to describe the= =20 dire consequences if the utility goes bankrupt. The call is then transferre= d=20 to the state Capitol so shareholders can implore lawmakers to support a=20 controversial plan to help the utility. Legislators and their staffers say= =20 the shareholders often are confused and scared their investments will be=20 degraded or wiped out.=20 * State Treasurer Phil Angelides joins an advocacy group for the poor in=20 urging the state's huge pension funds to use their economic power to levera= ge=20 power companies. The Pacific Institute for Community Organization says the= =20 two pension funds own at least $1.2 billion in stocks and bonds in most of= =20 the firms that sell electricity to California.=20 * The Assembly by a 69-0 vote approves a bill to spend $10 million on=20 environmental studies needed before Path 15 the inadequate transmission-li= ne=20 group between Northern and Southern California can be expanded. The bill= =20 moves to the Senate.=20 * Pacific Gas and Electric announces a decrease in natural gas prices down= =20 38 percent from May's rates and 66 percent lower than January's rates. The= =20 decline will bring the average residential gas bill to $26 when it goes int= o=20 effect June 7. Market analysts predict the rates will remain stable until= =20 December when demand is expected to increase with winter heating loads.=20 * No power alerts Tuesday as electricity reserves stay above 7 percent.=20 * Shares of Edison International closed at $10.05 down 53 cents. PG&E Corp= .=20 closed at $11.25 down 15 cents. Sempra Energy the parent company of San= =20 Diego Gas & Electric closes at $26.91 down 43 cents.=20 WHAT'S NEXT: * Davis' representatives continue negotiating with Sempra the parent compa= ny=20 of San Diego Gas and Electric Co. to buy the utility's transmission lines.= =20 THE PROBLEM: High demand high wholesale energy costs transmission glitches and a tight= =20 supply worsened by scarce hydroelectric power in the Northwest and=20 maintenance at aging California power plants are all factors in California'= s=20 electricity crisis.=20 Edison and PG&E say they've lost nearly $14 billion since June to high=20 wholesale prices the state's electricity deregulation law bars them from=20 passing on to consumers. PG&E saying it hasn't received the help it needs= =20 from regulators or state lawmakers filed for federal bankruptcy protection= =20 April 6.=20 Electricity and natural gas suppliers scared off by the two companies' poo= r=20 credit ratings are refusing to sell to them leading the state in January = to=20 start buying power for the utilities' nearly 9 million residential and=20 business customers. The state is also buying power for a third investor-own= ed=20 utility San Diego Gas & Electric which is in better financial shape than= =20 much larger Edison and PG&E but also struggling with high wholesale power= =20 costs.=20 The Public Utilities Commission has approved average rate increases of 37= =20 percent for the heaviest residential customers and 38 percent for commercia= l=20 customers and hikes of up to 49 percent for industrial customers and 15=20 percent or 20 percent for agricultural customers to help finance the state'= s=20 multibillion-dollar power buys.=20 2001 Associated Press ?=20 California conserves=20 Wednesday June 6 2001=20 2001 San Francisco Chronicle=20 URL:=20 /06/E D86597.DTL=20 WHEN RAIN fails to fall from the sky Californians know why there is a=20 drought. But when rolling blackouts suddenly appeared in the dead of winter= =20 many of us wondered who was responsible for and who has profited from what= =20 now seems like an artificially created power shortage in the state.=20 Our skepticism proved to be right. Windfall profits were reaped by=20 electricity generators while natural gas importers extracted prices far abo= ve=20 the national average.=20 Timid federal overseers exact only wrist-slap penalties on the offending=20 energy firms. The White House scoffs at temporary controls for a=20 malfunctioning market. California's state government has ended up as the bi= ll=20 payer for the sickly utilities forking over $8 billion to generators. This= =20 number may hit $40 billion by year-end.=20 It's an infuriating tangle. All the more remarkable then that skeptical= =20 Californians have managed within two months to reduce their use of=20 electricity by 11 percent. The public's response to the governor's appeal f= or=20 energy conservation has exceeded expectations. Although many businesses hav= e=20 suffered enormous losses ordinary people have made relatively painless=20 sacrifices. People turned off their lights purchased energy-efficient=20 lightbulbs used air conditioning less and shut off their computers when no= t=20 in use.=20 Despite this remarkable civic compliance we still face an unconscionable= =20 lack of leadership. President Bush seems perfectly willing to allow Texas= =20 power companies to pummel the once-powerful California economy. He repeats = a=20 mantra about creating more supply -- which California is doing with 15 powe= r=20 plants under construction -- while ignoring the outsized sums paid to a=20 handful of energy generators.=20 At the same time Gov. Gray Davis who has given new meaning to the word=20 dithering has failed to make the tough and transparent decisions. He delay= ed=20 an inevitable rise in power rates. Davis also dragged his feet in openly=20 announcing new power contracts that commit California to billions in spendi= ng=20 over the next decade.=20 To Davis' credit he has urged California to conserve by laying out an $800= =20 million plan to cut power use and invest in energy-saving programs. The=20 message is getting out as higher rates take effect this month.=20 Despite a woefully unbalanced market and shortsighted leadership the peopl= e=20 of California have demonstrated that if there is a will there is a way.=20 Now it is time for our leaders to follow the wisdom of their constituents.= =20 2001 San Francisco Chronicle ? Page?A - 20=20 L.A. power customers awash in cheap energy=20 John Wildermuth Chronicle Staff Writer Wednesday June 6 2001=20 2001 San Francisco Chronicle=20 URL:=20 /06/M N133438.DTL=20 Los Angeles -- These are flush times for the city's Department of Water and= =20 Power and the energy executives are loving every minute of it.=20 As are their customers.=20 Private power companies throughout California have been raising rates and= =20 warning customers about a long hot summer filled with blackouts but the= =20 city- owned DWP has been keeping prices stable and the lights on for 1.2=20 million Los Angeles customers.=20 Our customers are being really nice to us said Angelina Galiteva the=20 utility's strategic planning director. They love the DWP.=20 Although Gov. Gray Davis' administration announced that the state had reduc= ed=20 its energy consumption 11 percent from a year ago those in Los Angeles had= =20 cut back less than half that -- and polls show they view the energy situati= on=20 less seriously than other Californians.=20 Public utilities such as Los Angeles water and power have seen their revenu= es=20 increase during the energy crunch because they can sell their excess power = at=20 higher prices than ever before in a market tilted toward sellers.=20 The rest of the state doesn't always feel that same warm glow. Davis has=20 accused the DWP and other California public utilities of putting exorbitant= =20 price tags on the excess electricity they sell to the rest of the energy-= =20 starved state.=20 It's a charge Los Angeles utility executives deny arguing that their exces= s=20 power is sold at cost plus 15 percent which they say is a fair return for= =20 their customers.=20 Without our support a million more homes (elsewhere in California) would= =20 have suffered rolling blackouts which is a powerful message Galiteva sai= d.=20 It wasn't supposed to be this way. When the power industry was deregulated = in=20 the late '90s energy giants like Pacific Gas and Electric Co. and Southern= =20 California Edison were expected to be the big winners. Now PG&E is in=20 bankruptcy and Edison is a short step away.=20 When deregulation came the experts said that the investor-owned utilities= =20 would become lean mean machines that would be better able to operate in th= e=20 new environment Galiteva said. But now public power has shown it can ser= ve=20 customers more efficiently at lower rates.=20 While much of the state worries about electrical supply Los Angeles=20 residents have been saved many of those concerns.=20 In a survey done last month by the Public Policy Institute of California 4= 8=20 percent of the people in the Bay Area thought that electricity cost and=20 availability were the most important issues facing the state. In Los Angele= s=20 however only 33 percent put the energy crunch on top. When questioned abou= t=20 the size of the power problem and the effect it would have on the state's= =20 economy Los Angeles residents were consistently less concerned than people= =20 elsewhere in California.=20 People in Los Angeles have been somewhat isolated from the energy crisis= =20 concluded Mark Baldassare who conducted the survey.=20 That doesn't mean the state's energy problems haven't had an effect. The DW= P=20 has seen a 3 percent to 5 percent reduction in some uses which officials= =20 have dubbed sympathy conservation. The utility also is offering its bigge= st=20 customers financial incentives to cut back on their power use.=20 Our average annual load growth is about 80 megawatts Galiteva said. By= =20 this summer we expect to have saved 40 megawatts through conservation. By= =20 December we expect 60 megawatts in savings.=20 The utility also is making a major attempt to create a conservation ethic= =20 among its customers. DWP's comfortable situation has made it possible to=20 offer them the carrot without the need to show them the stick.=20 Conservation no longer means doing without Galiteva said. Beer can be= =20 just as cold with a superefficient refrigerator. Rooms can be just as brigh= t=20 with superefficient light bulbs.=20 A Green Power program also is promoting the use of renewable energy=20 resources such as solar wind and hydroelectric power. About 75000 custome= rs=20 are paying an extra $3 per month to increase DWP's use of renewable power= =20 sources.=20 We're trying to give our customers a choice and a voice in determining the= =20 mix of power they use Galiteva said. They know they can do (conservation= )=20 now or see it being mandated later.=20 Los Angeles power officials -- and their customers -- know the DWP isn't=20 always going to continue as an island of tranquility in a sea of energy=20 turmoil. The utility's aging gas-fired plants have been affected by the=20 rising price of natural gas. Demand for energy continues to rise. In a deba= te=20 last month both candidates for mayor of Los Angeles agreed that increases = in=20 local power bills are inevitable.=20 But the DWP has been supplying power to Los Angeles since 1916 and its=20 executives believe that the state's deregulation disaster has shown the=20 advantages of the city-owned utility.=20 It's nice to be the lean mean green efficient machine that no one ever= =20 expected us to become Galiteva said.=20 E-mail John Wildermuth at 2001 San Francisco Chronicle ? Page?A - 13=20 PG&E doesn't want to pay for energy to avert blackouts=20 DAVID KRAVETS Associated Press Writer Wednesday June 6 2001=20 2001 Associated Press=20 URL:=20 tate0 306EDT0102.DTL=20 (06-06) 00:06 PDT SAN FRANCISCO (AP) --=20 Pacific Gas & Electric Co. has told a bankruptcy judge it should not have t= o=20 pay for what could amount to billions of dollars in spot-market energy cost= s=20 to avert blackouts.=20 The company's position was one of two developments that emerged Tuesday as= =20 the bankrupt utility tries to cope with fallout from California's power=20 crisis. The other development saw a group of creditors that PG&E owes=20 billions endorse $17.5 million in bonuses for top managers at the utility.= =20 San Francisco-based PG&E filed for bankruptcy protection in April after=20 racking up an $8.9 billion debt which under state law it could not recoup= =20 from customers.=20 Tuesday's court dispute centered on who pays for energy bought at the last= =20 minute to avoid blackouts.=20 PG&E said an April federal regulatory decision requires that electricity ca= n=20 only be sold to those with the ability to pay electricity generators. The= =20 state is the only player with such ability said PG&E attorney Jerome Faulk= =20 who argued that the utility shouldn't have to pay the $330 million in month= ly=20 spot-market energy bills.=20 Judge Dennis Montali said he may craft such an order. But he said the order= =20 would not preclude the state from suing PG&E to recover the cost.=20 In a separate but related development a committee charged with devising a= =20 payment plan for those creditors owed billions by PG&E said it will sign of= f=20 on the utility's plan to pay $17.5 million in bonuses to PG&E's management= =20 team.=20 Attorney Allan Marks who represents the committee said such payments are= =20 normal during large bankruptcy cases. Under the agreement which Montali wi= ll=20 consider at a June 18 hearing the company must quickly produce a debt=20 payment plan that passes judicial muster.=20 The utility said it needs the bonuses for a management retention program.= =20 Marks agreed. While the $17.5 million leaves less for creditors without a= =20 financial incentive PG&E's key top brass may not be willing to cooperate wi= th=20 a payment plan Marks said.=20 The main goal for the creditors' support here is to move the bankruptcy as= =20 quickly and smoothly as possible Marks said.=20 The Utility Reform Network a consumer watchdog group says PG&E is simply= =20 rewarding managers of a failed business effort.=20 They're just showering money on the same people who got them in this mess= =20 said TURN's Mike Florio.=20 The proposed bonuses would come on top of $50 million in bonuses and raises= =20 PG&E awarded just before the April 6 bankruptcy filing.=20 The case is In Re Pacific Gas & Electric Co. 01-30923 DM.=20 2001 Associated Press ?=20 Metcalf plant gets preliminary approval=20 Posted at 12:21 a.m. PDT Wednesday June 6 2001=20 BY MIKE ZAPLER=20 Mercury News=20 As the San Jose City Council approached its 10-1 vote Tuesday to give an=20 initial nod to Calpine's big power plant in South San Jose Councilwoman=20 Linda LeZotte perhaps captured the body's mood best.=20 ``I'm holding my nose to vote for this thing'' she said. ``Without faultin= g=20 the mayor or his staff quite frankly I think this deal stinks.''=20 Caught in what some members called a bind beyond their control the council= =20 gave preliminary approval to an agreement negotiated by Mayor Ron Gonzales= =20 and Calpine on the company's proposed 600-megawatt Metcalf Energy Center.= =20 Councilman Forrest Williams who represents the Santa Teresa neighborhood= =20 near the site cast the lone vote against the deal.=20 The agreement is scheduled to come back before the council for a final vote= =20 on June 26 but Tuesday's vote effectively shifts the battle to the courts= =20 where residents are expected to lodge a lawsuit in one final attempt to blo= ck=20 the plant.=20 Still Councilwoman Pat Dando and some of her colleagues raised questions= =20 about the deal they said they want answered before the final vote. Their=20 issues could be incorporated into the final deal.=20 Many of the concerns focused on a $50 million recycled water pipeline=20 Gonzales agreed to have the city build to accommodate the project $10=20 million of which would be reimbursed by Calpine over 30 years.=20 Pipeline possibility=20 Dando said that a private company Great Oaks Water may be willing to buil= d=20 the pipeline extension itself saving the city the $50 million expense.=20 Officials at Great Oaks were unavailable Tuesday.=20 Council members peppered staff with other questions. Many were alarmed by= =20 claims of the Silicon Valley Toxics Coalition which said that using treate= d=20 sewage water to cool the power plant could allow dangerous chemicals to see= p=20 into drinking water aquifers. An environmental services director said the= =20 recycled water meets federal specifications but that there is no protocol= =20 for testing other chemicals not included in those standards.=20 Councilman Ken Yeager asked why Calpine should be allowed to spread a $3.9= =20 million water connection fee over 10 years -- an arrangement that would=20 mandate an amendment to city law.=20 LeZotte meanwhile said she wants to hold Calpine accountable to install= =20 ammonia-free technology at the plant. Ammonia is highly hazardous and=20 residents say the use of the chemical to clean the plant is among their chi= ef=20 concerns.=20 The agreement requires the company to install technology to reduce or=20 eliminate the use ammonia when it becomes ``technologically and economicall= y=20 feasible.'' LeZotte said she wants a clear definition of ``feasible''=20 included in the deal.=20 Tuesday's vote marked a stark departure from the council's November vote to= =20 deny Metcalf. At the time council members said a power plant was=20 inappropriate for the area and many members said Tuesday that they still= =20 believe that.=20 Bowing to pressure=20 But with Gov. Gray Davis endorsing Metcalf in April and the California Ener= gy=20 Commission widely expected to override the city's denial this month counci= l=20 members said they had no choice but to cut the best deal it could and allow= =20 the project to proceed.=20 That explanation however didn't sit well with residents of the Santa Tere= sa=20 neighborhood adjacent to the Metcalf site one of whom accused Gonzales and= =20 the council of ``switching sides when the opposing team gets too close to t= he=20 goal line.''=20 Contact Mike Zapler at [email protected] or at (408) 275-0140.=20 Feds probe AES Williams=20 Antitrust investigation looks into allegations of manipulated energy prices= =20 through reduced power-plant construction.=20 June 6 2001=20 By JAMES ROWLEY Bloomberg News=20 WASHINGTON - The U.S. Justice Department opened an antitrust investigation= =20 into California's electricity shortage by probing allegations that AES Corp= .=20 and Williams Energy Services Co. are limiting power-plant expansion to driv= e=20 up prices.=20 AES Corp. the biggest U.S. power-plant developer disclosed the=20 investigation in a filing with the U.S. Securities and Exchange Commission.= =20 The Justice Department is looking into a supply-and-marketing agreement=20 between AES' California power-plant unit and a Williams unit that supplies= =20 natural gas.=20 Williams owner of the second-largest U.S. natural-gas pipeline system als= o=20 markets the power produced by AES' three electricity plants in the state.= =20 The department alleges the agreement limits expansion of generating capacit= y=20 near some AES plants.=20 AES said it was cooperating with the Justice Department investigation whic= h=20 began last month into possible violations of Section 1 of the Sherman=20 Antitrust Act.=20 That provision outlaws any restraint of trade that stifles competition.=20 A shortage of generating capacity in California has led to soaring wholesal= e=20 prices and rolling blackouts and prompted Pacific Gas & Electric the state= 's=20 largest utility to seek bankruptcy protection in April.=20 Aaron Thomas a spokesman for AES based in Arlington Va. said the U.S.= =20 investigation started no more than a couple of weeks ago.=20 Williams spokeswoman Paula Hall-Collins said the Tulsa Okla.-based company= =20 is cooperating.=20 Gina Talamona Justice Department spokeswoman said the agency had no=20 immediate comment.=20 The investigation was opened several weeks after the Federal Energy=20 Regulatory Commission investigated AES plants in Long Beach and Huntington= =20 Beach designated must run under the Federal Power Act did not produce= =20 electricity for 10 days in April and May 2000. Williams agreed to pay the= =20 operator of California's electric grid $8 million to settle allegations tha= t=20 it overcharged for power.=20 FERC charged in March that the companies had a financial incentive to keep= =20 the units out of service to force the California Independent System Operato= r=20 to buy power from AES' plant in Redondo Beach at prices close to the=20 FERC-imposed cap of $750 per megawatt-hour.=20 AES said it was complying with a Justice Department demand for documents=20 about the agreement between its AES Southland LLC unit and Williams Energy= =20 Services Co. AES Southland which operates the three power plants was also= =20 asked to respond to interrogatories the company said.=20 The Williams unit supplies the natural gas to fuel the AES plants and marke= ts=20 the power they produce.=20 AES and Williams jointly produce and sell about 4000 megawatts in Californ= ia=20 -- 6 to 8 percent of the state's power -- enough electricity to light about= 3=20 million typical California homes.=20 AES shares dropped $2.05 to $42.54. Williams Cos. shares dropped $1 to=20 $38.20. Calpine Begins Construction of Peaking Energy Center in Gilroy Calif.=20 June 6 2001=20 SAN JOSE Calif. June 5 /PRNewswire/ via NewsEdge Corporation -=20 Calpine Corporation (NYSE: CPN) the San Jose Calif.-based independent pow= er=20 company today announced that initial construction of 135 megawatts (mw) of= =20 peaking generation capacity will begin during this week adjacent to its=20 existing Gilroy Power Plant in Gilroy Calif. Through an Application for=20 Certification (AFC) filed with the California Energy Commission (CEC) on=20 April 25 2001 Calpine proposed to add three 45-mw simple-cycle gas turbin= e=20 peaking units in the first of a two-phase process. The California Energy=20 Commission approved the project on May 21 2001.=20 Because the required natural gas water and transmission infrastructure=20 exists at our Gilroy plant it is an ideal site for the addition of peaking= =20 generation allowing for rapid installation of needed capacity. The first= =20 three units are expected to begin generating electricity this September= =20 commented Bryan Bertacchi Calpine Vice President - Western Region.=20 Upon completion the two-phase build out the Gilroy Energy Center will be a= =20 270-mw natural gas-fired simple-cycle peaking generation facility located= =20 on approximately 9.5 acres at 1400 Pacheco Pass Highway in Gilroy. Commerci= al=20 operation of Phase One is scheduled for September 2001. An additional three= =20 45-mw gas turbine generators will be installed in Phase Two with full=20 build-out estimated for May 2002. Phase Two requires the filing of an=20 additional application with the CEC and is subject to a four-month review= =20 process.=20 Initial construction will begin this week with site and civil engineering= =20 activities occurring for approximately six weeks at which time the site wil= l=20 be cleared and leveled. Foundation work and the installation of generation= =20 equipment will follow shortly thereafter and commissioning and testing wil= l=20 take place for a two to three week period prior to commercial operation in= =20 September 2001.=20 The Gilroy Energy Center web site has been created to host all information= =20 and updates related to this project. For additional information please vis= it=20 www.gilroypower.com.=20 Calpine Corporation based in San Jose Calif. is dedicated to providing= =20 customers with reliable and competitively priced electricity. Calpine is=20 focused on clean efficient natural gas-fired generation and is the world'= s=20 largest producer of renewable geothermal energy. Calpine has launched the= =20 largest power development program in North America. To date the company ha= s=20 approximately 32200 megawatts of base load capacity and 7200 megawatts of= =20 peaking capacity in operation under construction pending acquisitions and= =20 in announced development in 29 states and Canada. The company was founded i= n=20 1984 and is publicly traded on the New York Stock Exchange under the symbol= =20 CPN. For more information about Calpine visit its Website at=20 www.calpine.com.=20 This news release discusses certain matters that may be considered=20 forward-looking statements within the meaning of Section 27A of the=20 Securities Act of 1933 as amended and Section 21E of the Securities=20 Exchange Act of 1934 as amended including statements regarding the intent= =20 belief or current expectations of Calpine Corporation (the Company) and i= ts=20 management. Prospective investors are cautioned that any such forward-looki= ng=20 statements are not guarantees of future performance and involve a number of= =20 risks and uncertainties that could materially affect actual results such as= =20 but not limited to (i) changes in government regulations including pendin= g=20 changes in California and anticipated deregulation of the electric energy= =20 industry (ii) commercial operations of new plants that may be delayed or= =20 prevented because of various development and construction risks such as a= =20 failure to obtain financing and the necessary permits to operate or the=20 failure of third-party contractors to perform their contractual obligations= =20 (iii) cost estimates are preliminary and actual cost may be higher than=20 estimated (iv) the assurance that the Company will develop additional=20 plants (v) a competitor's development of a lower-cost generating gas-fired= =20 power plant and (vi) the risks associated with marketing and selling power= =20 from power plants in the newly competitive energy market. Prospective=20 investors are also cautioned that the California energy environment remains= =20 uncertain. The Company's management is working closely with a number of=20 parties to resolve the current uncertainty while protecting the Company's= =20 interests. Management believes that a final resolution will not have a=20 material adverse impact on the Company. Prospective investors are also=20 referred to the other risks identified from time to time in the Company's= =20 reports and registration statements filed with the Securities and Exchange= =20 Commission.=20 MAKE YOUR OPINION COUNT - Click Here=20 SOURCE Calpine Corporation=20 CONTACT: media Lisa Poelle ext. 1285 or investors Rick Barraza ext.=20 1125 both of Calpine Corporation 408-995-5115=20 Web site: http://www.gilroypower.com=20 Web site: http://www.calpine.com (CPN)=20 Reliant Urges FERC to Drop or Amend California Price Caps to Avoid Addition= al=20 Shortages and More Blackouts=20 June 6 2001=20 HOUSTON June 5 /PRNewswire/ via NewsEdge Corporation -=20 Reliant Energy (NYSE: REI) filed an emergency motion with the Federal Energ= y=20 Regulatory Commission (FERC) on Monday urging the agency to drop the=20 California price caps first applied May 29 or at a minimum amend them to= =20 reflect the true costs they are attempting to control. The current price=20 caps which send inaccurate market signals are actually decreasing supply= =20 and increasing demand thus worsening an already dire situation.=20 FERC has been publicly dedicated to an open market from the beginning of t= he=20 California power crisis. We encourage FERC to reexamine these price caps an= d=20 continue that dedication said Joe Bob Perkins president and chief=20 operating officer Reliant Energy Wholesale Group. Reliant is committed to= =20 helping keep the lights on in California this summer and wants to ensure th= at=20 if caps must remain part of the picture they actually help increase supply= =20 and fix the problem.=20 Although the price caps were first imposed less than a week ago they have= =20 already begun to damage the market by decreasing supply. The price caps are= =20 creating a myriad of problems:=20 -- Creates Misleading Signals - The price cap methodology is misleading=20 the public on the actual cost of power. Reported dispatch costs in=20 Southern California during emergencies is far below what the actual=20 financial settlements will be under the FERC's final market mitigation=20 order. This confusion results from the proxy price used for=20 dispatch utilizing an extremely distorted blended fuel cost index.=20 This index averages gas costs in northern and southern parts of the=20 state an impossibility in the actual market. This authorizes the=20 California Independent System Operator (ISO) to require that=20 generators dispatch power at reported market clearing prices well=20 below actual cost when back-up generation capacity begins to dip below=20 7.5 percent.=20 -- Depletes Power from Peaking Plants - The price caps distort dispatch=20 signals on peaking plants which in some cases may be run only a few=20 days of the year because of emission regulations. The current FERC=20 price controls encourage the ISO to purchase power from emergency=20 peaking plants before it is really needed even in the absence of a=20 stage three emergency. This depletes supplies that will by law run=20 out when blackout season intensifies later this summer. This power=20 from peaking units should only be purchased when blackouts are=20 imminent -- not in stage one or two emergencies.=20 -- Eliminates Price Signals for Retail Customers - Price caps remove=20 price signals for retail customers. Customers particularly=20 industrial companies which should be encouraged to curtail during=20 shortages are not encouraged to conserve power when dispatched price=20 caps keep prices below the actual cost to produce electricity.=20 -- Discourages Supply from Out-of-State - Suppliers outside of=20 California who are under no legal obligation to dispatch power during=20 an emergency in the state are not encouraged to increase available=20 production when reported market clearing prices are below their cost=20 to produce. During times of emergencies utilities across the Western=20 region are not likely to take on additional risks and costs if they=20 don't believe they will be fully compensated - a situation the current=20 price caps create.=20 MAKE YOUR OPINION COUNT - Click Here=20 SOURCE Reliant Energy=20 CONTACT: Maxine Enciso of Ketchum Public Relations Los Angeles=20 310-444-1303 for Reliant Energy or media Richard Wheatley of Reliant=20 Energy 713-207-5881=20 Photo: NewsCom: AP=20 Archive: http://photoarchive.ap.org PRN Photo Desk 888-776-6555 or=20 212-782-2840=20 Company News On-Call: or fax=20 800-758-5804 ext. 419090=20 Web site: http://www.reliantenergy.com (REI)=20 By Kathleen McFall [email protected] President George W. Bush's energy package encourages the use of biomass fue= ls=20 for both transportation purposes and electricity generation. They can=20 provide a reliable source of energy at a stable price and they can also=20 generate income for farmers landowners and others who harness them his= =20 administration's report said.=20 Despite this warm and fuzzy language however the administration offered n= o=20 tangible funding for the fledgling biofuels industry=01*other than an exten= sion=20 of an existing ethanol tax credit that was not due to expire until 2007=01*= a=20 significant disappointment and surprise to advocates of renewable=20 transportation fuels. The report did recommend expanding tax credits for biomass energy projects = to=20 include forest-related and agriculture fuel sources and threw its weighty= =20 support at a new credit for electricity produced from biomass co-fired with= =20 coal. These recommendations are already included in the president's 2002=20 budget.=20 We are pleased that the administration included expansion of the biomass t= ax=20 credit and hope that with congressional leadership we will see this=20 expanded provision signed into law this year said Katherine Hamilton=20 co-director of the American Bioenergy Association (ABA).=20 Unlike other portions of the recommended energy policy biomass energy=20 probably will not suffer under the recent change in Senate composition giv= en=20 Senate Majority Leader Tom Daschle's (D-S.D.) agricultural constituency and= =20 his previous support of the biofuels industry.=20 According to the National Energy Policy Development report biomass account= s=20 for about 76% of non-hydropower renewable electricity generation=20 representing a total of about 1.6% of total U.S. electricity supply.=20 Biopower advocates however envision an even greater market penetration in= =20 the coming decades and point to its environmental and ancillary advantages.= =20 For example given that biomass combustion can be carbon dioxide-neutral (i= f=20 the growth and use cycle is managed sustainably) environmental groups=20 support an expanded role. Farmers with marginal lands that could grow bioma= ss=20 fuel could enjoy economic benefits. With large amounts of wood residue the= =20 forest industry also stands to benefit from wider use of wood as a power=20 source.=20 Renewable energy offers a particular advantage to the lumber and paper=20 industry and many analysts project that the industry may soon become a net= =20 seller of electricity.=20 In the lumber and paper industries wood scraps are sometimes directly fed= =20 into boilers to produce steam for their manufacturing processes or to heat= =20 their buildings. For that reason renewable energy offers a particular=20 advantage to the lumber and paper industry and many analysts project that= =20 the industry may soon become a net seller of electricity said the energy= =20 policy report.=20 Co-firing with coal Biomass=01*usually wood or wood residue=01*has traditionally been burned di= rectly=20 in the industrial sector for heat or on-site electricity generation.=20 According to the U.S. Department of Energy (DOE) the existing 10 GW of=20 installed capacity are based on this direct-combustion technology.=20 For utilities and power-generating companies with coal-fired capacity=20 however biomass co-firing may represent one of the least-cost renewable=20 energy options said the DOE. The process involves blending different=20 materials in varying amounts with coal.=20 Not only does mixing biomass with coal reduce emissions it is likely to be= =20 cost-effective. Southern Co. estimates that a biomass plant alone could=20 generate power depending on its location at 4 to 11 cents/kWh. Given that= =20 the lower range of this corresponds to coal generation costs there are=20 clearly circumstances where biomass-coal co-firing would be economically=20 attractive today. Plus the environmental public relations benefit for=20 utilities with coal-fired capacity would be valuable.=20 Domestic biomass generation capacity could reach 20-30 GW by the year 2020 = by=20 co-firing at existing U.S. coal-fired power plants.=20 According to a recent report prepared by five National Laboratories domest= ic=20 biomass generation capacity could reach 20-30 GW by the year 2020 by=20 co-firing at existing U.S. coal-fired power plants.=20 A recent report by the United Nations Intergovernmental Panel for Climate= =20 Change (IPCC) also cites the potential of coal co-firing with biomass. The= =20 IPCC report concludes that co-firing in coal boilers results in the lowest= =20 cost and least technical risk of the examined approaches for biomass=20 conversion to electricity.=20 Working out the technical kinks Already said the DOE six power plants in the U.S. are currently co-firing= =20 coal and wood residue products on a regular basis. Another 10 plants have= =20 successfully tested co-firing over the last decade and at least six more= =20 plants are now conducting or planning tests.=20 For example Southern Co. is working with DOE the Southern Research=20 Institute and the Electric Power Research Institute to study ways to grow a= nd=20 harvest switchgrass to blend with coal as a fuel for power generation.=20 Ideally suited for the southeastern U.S. switchgrass is a rugged grass tha= t=20 can be grown on marginal agricultural land. Reaching heights of up to 12=20 feet it requires little fertilization and herbicide and can be harvested= =20 twice a year.=20 Harvesting methods co-milling of switchgrass and pulverized coal=20 pilot-scale co-firing tests and a full-scale demonstration of co-firing at= =20 Alabama Power Co.'s Plant Gadsden are part of Southern Co.'s collaborative= =20 project.=20 The U.S. Agriculture Department is also taking a role in exploring the=20 potential of biomass and coal co-firing as a means to give farmers new=20 markets especially for currently idle land. The agency recently authorized= =20 funding for three co-firing demonstration projects.=20 In Iowa the Chariton Valley Biomass Project is a cooperative effort to=20 develop warm and cool season grasses (such as switchgrass) to co-fire with= =20 coal at Alliant Energy's Ottumwa Generating Station. The project is designe= d=20 to generate a sustained supply of 35 MW of biomass energy. Eventually the= =20 grass could substitute for as much as 5% of the coal currently burned at th= e=20 plant.=20 In addition to reducing coal emissions the Chariton Valley Biomass Project= =20 will support the local farm economy.=20 In addition to reducing coal emissions the project will support the local= =20 farm economy because the grass and trees will come from acreage taken out o= f=20 production under the Agriculture Department's Conservation Reserve Program= =20 (CRP). CRP land is generally marginal land that the government subsidizes= =20 farmers to leave idle to both prevent erosion and protect commodity prices= =20 from product surpluses.=20 The Pennsylvania Switchgrass Energy and Conservation Project will produce= =20 switchgrass on CRP land for sale to a local cooperative's coal-fired=20 fluid-bed combustors.=20 In New York the Agriculture Department project will fund willow biomass=20 crops and switchgrass on CRP acreage in the central and western part of the= =20 state. The primary markets for the willow biomass are two coal-burning powe= r=20 plants and a small university central heating facility.=20 Land conflicts transportation may be obstacles As these pilot projects illustrate biomass conversion efforts may have the= =20 most significant potential in rural areas. Since biomass is widely=20 distributed it has good potential to provide rural areas with a renewable= =20 source of energy. The challenge is to provide =01( conversion and delivery = of=20 bioenergy to the marketplace in the form of modern and competitive energy= =20 sources said the IPCC report.=20 A potential drawback to co-firing is transportation. Transportation of=20 wood-based energy products is more costly per unit of energy than coal f= or=20 example and most analysts believe it will prove most economical to site=20 generation plants near biomass sources.=20 The generating plant or biorefinery must be located near to the resource t= o=20 minimize transport costs of the low-energy-density biomass as well as to=20 minimize impacts on air and water use the IPCC report said. However note= s=20 the report's authors economies of scale may be significant enough to offse= t=20 the transport costs involved.=20 A potential drawback over the long term however for biomass conversion is= =20 land use conflicts. The IPCC report notes that by 2100 the global land=20 requirement to feed the growing world population will increase substantiall= y.=20 Up until this time there may well be sufficient land to supply all demands= =20 for food fibre and energy but at some stage after that land-use conflict= s=20 could arise and before that competition for water and irrigation may be a= =20 constraint.=20 What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Re: Confidential - Notes from Portland Visit Body:: David I will have this re-reviewed by Oregon counsel but it was scrubbed about 18-24 months ago as being enforceable. Thanks. Michelle What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: RE: EPSA/EEI on Reliability Body:: Charles -- Thanks for the reply. Your thoughts on the EEI draft in terms of details would be helpful. As I read it we still have the problems with the EEI draft that we had with the NERC draft on which it is based -- deference regional rules variances regional reliability entities regional advisory boards limits on FERC authority etc. etc. It would also be helpful to have input on whether the plans for EISB could go forward if legislation like the EEI bill were enacted into law. It would seem not since the SRO would focus only on reliability as defined by how the bill defines what matters are subjects for an organization standard. What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Re: All-Employee Meeting Report Body:: We have got to do better at this. IR did a webcast of the annual meeting that from all reports had a minimum of glitches. Can we use the same technology? Courtney Votaw 03/13/2001 09:10 AM To: Steven J Kean/NA/Enron@Enron Mark Palmer/Corp/Enron@ENRON Karen Denne/Corp/Enron@ENRON cc: Mary Clark/Corp/Enron@ENRON Erin Rice/Corp/Enron@Enron Subject: All-Employee Meeting Report I have attached a success report of the streaming communications vehicles we used for the All Employee meeting on Feb. 21 2001. The report includes information about the following: Video Teleconference Audio and Video quality Viewing employees IP-TV Statistics Successes of the locations streamed Video Requests Quantity by location and group To improve access and increase the employee's viewing experience at future meetings we are working with the IP-TV technical team to find solutions to the problems that occurred in February. From the employee feedback we received we will plan to send slides in advance to the video teleconference locations. Please let me know if you have any questions regarding this report. Thanks Courtney What should this email be categorized as? [/INST] Logistic Arrangements <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Government Affairs off-site presentations June 2000 Body:: ----------------- What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Governor Ridge might call Ken Lay today Body:: FYI. These are the items I left Ken a voicemail about. ----------------- What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Re: ken lay tour Body:: I have advised against Ken or Jeff attending the generators meeting: Ken is still willing to make time avail on the 3d to meet with the gov. From: Susan M Landwehr on 04/29/2001 05:04 PM To: Richard Shapiro/NA/Enron@Enron Janel Guerrero/Corp/Enron@Enron Jeff Dasovich/NA/Enron@Enron Maureen McVicker/NA/Enron@Enron Steven J Kean/NA/Enron@Enron Paul Kaufman/PDX/ECT@ECT cc: Subject: Re: ken lay tour All--here's some thoughts on the RGA related events. We currently have Ken scheduled to participate in an energy roundtable discussion on the afternoon of the 2nd with at least four governors attending that session--Kempthorne Hull Geringer and Ridge. (Engler and Rowland are also attending the overall event but they will be in a healthcare breakout session). Kaufman and I thought that it would be particularly helpful for Arizona Gov Hull and Idaho Gov Kempthorne to hear Ken's remarks and have a chance to talk with him. I have also been working with Rosalee to schedule an early evening (6:00-7:00pm) meeting that night with Exelon co CEO John Rowe. John Rowe will be in California for some investor meetings and well as attending some sections of the RGA events. I have told my counterpart at Rowe's office that we would confirm Ken's availability on Monday morning. If you do decide that Ken should attend the Davis meeting in Sacremento that day instead we will just reconfigure a bit. Paul and I will cover the RGA events and I will cancel the John Rowe get together. I would also want to talk about having Mr. Lay reach out to Hull and Kempthorne via phone sometime in the near future. Same with Rowe. Rosalee Fleming 04/27/2001 07:12 PM To: Janel Guerrero/Corp/Enron@Enron cc: Maureen McVicker/NA/Enron@Enron Jeff Dasovich/NA/Enron@Enron Richard Shapiro/NA/Enron@Enron Paul Kaufman/PDX/ECT@ECT Steven J Kean/NA/Enron@Enron Sherri Sera/Corp/Enron@ENRON Susan M Landwehr/NA/Enron@Enron Subject: Re: ken lay tour I received a return call from Lelanie in Governor Davis' office this evening. She said the Governor wanted to invite Ken Lay and Jeff Skilling to a meeting the Governor is having at 2:00 p.m. in Sacramento on May 2 with a lot of CEOs. I still pressed for a one on one meeting on May 3 in Sacramento but she told me the Governor wanted to have the one meeting all at once and his schedule was very tight on Thursday May 3. I transferred her to Sherri and called Ken. Ken wanted me to try to get more specific information which she shared that it is with generators - Sempra Williams CalPine Duke Dynegy and Reliant. She also said since the Governor has worked with Ken she thought he might prefer that he attend. Ken said to let you all know and be thinking whether we even want to do it. He said one thought might be that he'd do that meeting and maybe Jeff could do the one in L.A. on May 2. Talk to you Monday. Rosie Janel Guerrero 04/27/2001 02:39 PM To: Rosalee Fleming/Corp/Enron@ENRON Maureen McVicker/NA/Enron@Enron Jeff Dasovich/NA/Enron@Enron cc: Richard Shapiro/NA/Enron@Enron Paul Kaufman/PDX/ECT@ECT Subject: ken lay tour Just so we're all on the same page......Dasovich will arrive in Houston on Monday (mid-day) and will travel with Dr. Lay beginning on Wednesday (to Austin) and then on to LAX Sacramento etc. Steve said there really isn't time to have a pre-briefing so any questions that Ken has will have to be addressed enroute to CA. Rosalee....we're giving Steve the briefing book today so he can review over the weekend and we'll have a final copy to Ken before he departs next week. What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: <<Concur Expense Document>> - May - Env Strat Body:: ----------------- What should this email be categorized as? [/INST] Logistic Arrangements <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: nan Body:: Calif briefing What should this email be categorized as? [/INST] Logistic Arrangements <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Thank you Body:: thanks for your help in preparing for the Texas hearing. I think Texas legislators are viewing the California experience in the proper context and I think I was at least marginally articulate on the emissions issues as well. thanks again. What should this email be categorized as? [/INST] Personal but in professional context <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Re: Press Clipping - Germany (Enron Mention) Body:: The quotes are accurate but I did not say California does not have a supply problem. Mark Schroeder@ECT 03/19/2001 06:04 AM To: Steven J Kean/NA/Enron@Enron cc: Jackie Gentle/LON/ECT@ECT Alex Parsons/EU/Enron@Enron Subject: Press Clipping - Germany (Enron Mention) Steve - FYI and presumably they misquoted you on the problem (at least in California) not being a function of indaequate capacity (it is one of the root causes we have been pointing to over here among others). mcs ----------------- What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Fwd: FW: Body:: Return-path: <[email protected]> From: [email protected] Full-name: VKaminski Message-ID: Date: Tue 13 Nov 2001 21:03:34 EST Subject: Fwd: FW: To: [email protected] MIME-Version: 1.0 Content-Type: multipart/mixed X-Mailer: AOL 6.0 for Windows US sub 10539 Return-path: <[email protected]> From: [email protected] Full-name: VKaminski Message-ID: Date: Sun 11 Nov 2001 02:56:49 EST Subject: Fwd: FW: To: [email protected] MIME-Version: 1.0 Content-Type: multipart/mixed X-Mailer: AOL 6.0 for Windows US sub 10539 Content-Transfer-Encoding: quoted-printable Return-Path: <[email protected]> Received: from rly-xf05.mx.aol.com (rly-xf05.mail.aol.com [172.20.105.229]) by air-xf01.mail.aol.com (v81.9) with ESMTP id MAILINXF110-1019180521 Fri 19 Oct 2001 18:05:21 -0400 Received: from postmaster.enron.com (outbound5.enron.com [192.152.140.9]) by rly-xf05.mx.aol.com (v80.21) with ESMTP id MAILRELAYINXF57-1019180459 Fri 19 Oct 2001 18:04:59 -0400 Received: from corp.enron.com [192.168.110.110]) by postmaster.enron.com with ESMTP id f9JM4w304754 for <[email protected]> Fri 19 Oct 2001 17:04:58 -0500 (CDT) Received: from nahou-mscnx04p.corp.enron.com (unverified) by corp.enron.com (Content Technologies SMTPRS 4.2.1) with SMTP id for <[email protected]> Fri 19 Oct 2001 17:04:58 -0500 Received: from NAHOU-MSMBX03V.corp.enron.com ([192.168.110.40]) by nahou-mscnx04p.corp.enron.com with Microsoft SMTPSVC(5.0.2195.2966) Fri 19 Oct 2001 17:04:58 -0500 X-MimeOLE: Produced By Microsoft Exchange V6.0.4712.0 content-class: urn:content-classes:message MIME-Version: 1.0 Content-Type: text/plain charset=iso-8859-1 Subject: FW: Date: Fri 19 Oct 2001 16:34:52 -0500 Message-ID: X-MS-Has-Attach: X-MS-TNEF-Correlator: Thread-Topic: Thread-Index: From: Kaminski Vince J <[email protected]> To: Lin Martin <[email protected]> Cc: <[email protected]> X-OriginalArrivalTime: 19 Oct 2001 22:04:58.0864 (UTC) FILETIME=[17D6F700:01C158EA] X-Mailer: Unknown (No Version) Martin Lance What do you think? Vince > What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Re: Confidential - Mike Miller Body:: Elspeth do we want to do a new agreement or simply assume the obligations in the old one? If the former I'd do a new agreement. If the latter I believe I simply can do an assignment agreement once I receive a copy of the current agreement. It also depends on the language in the old one and whether we believe it protects ENA. So we'd have to look at it. Sharon do you have the file on this person? If so let me know and I will have someone come and pick it up. Thanks. Michelle Elspeth Inglis@ENRON on 04/14/2000 04:56:09 PM To: Michelle Cash/HOU/ECT@ECT cc: Subject: Confidential - Mike Miller Michelle when rolling over an employment contract from another Enron entity is it re-issued with same details but under ENA's name? thanks Elspeth ----------------- What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: RE: Thu evening Body:: Thanks. Confirmed. Vince What should this email be categorized as? [/INST] Logistic Arrangements <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: examples of auction processes that worked Body:: Jeff Skilling proposed a solution to Gov Davis to solve the supply and pricing problems in the California market. In summary the proposal would have a neutral party conduct an auction wherein the utilities would seek bids for 5-10 year packages of power from suppliers. The gov asked if anyone had successfully conducted such an auction in the industry already. I need your help to identify and describe any such examples (European or North American) by mid day Monday. Jeff and I will have a follow up call with the governor on Monday. Thanks What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Privileged and Confidential -- website Body:: FYI the attached article and story is disturbing and surprising about Southern Company. It also raises an issue that we could face if we are not careful. The article discusses internal diversity studies which the plaintiffs are using as evidence to support their claims. The company claims that the studies were done by people who did not know how to conduct the appropriate analyses under the relevant legal standards. I have this concern here as well when we have people running analyses that do not factor in the legal standards and instead try to interpret data themselves. I would like to talk about how to manage that. Let me know who you think should be included in such a meeting and I'll set something up. Thanks. Michelle What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: nan Body:: I talked to Hettie today. It's unlikely that we are going to find time for Jeff and the Governor to talk (because of the Governor's schedule). We'll try to set something up later. In the meantime the Governor should just sign the bill. Of course Hettie had already communicated this the Gov's office acknowledged that the message was recieved but did not make a specific commitment. What should this email be categorized as? [/INST] Logistic Arrangements <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: http://www.vaionline.it/ Body:: http://www.vaionline.it/ What should this email be categorized as? [/INST] Personal but in professional context <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Re: Body:: The conversation was very positive (Glynn did not know anything about it at first but looked into it and called Ken back Friday evening). Glynn said they were including the amount owed in their negotiations over the price for the transmission assets and said they intended to pay all of their debts including this one as soon as they get paid. He said that this weekk would be focussed on finalizing a deal for SCE given the threat of bankruptcy the discussions would then turn to PG&E. Jeff Dasovich Sent by: Jeff Dasovich 03/14/2001 07:03 PM To: [email protected] cc: Subject: Steve: Jim mentioned that Ken Lay was trying to talk to Glynn today about getting the PX credit issue resolved. Any progress made? Best Jeff What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Some funnies Body:: ----------------- What should this email be categorized as? [/INST] Purely Personal <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Confidential Attorney Client Privilege - Attorney Work Product Body:: I have drafted the attached letter denying the Cal ISO's request to send it (and the EOB) EPMI and EES' cost information for transactions over the FERC's cost cap. Since I believe we are on very firm ground my initial inclination was to send no response to the ISO's letter so there would be nothing to quote in the press. However I drafted this letter at Alan's suggestion for purposes of discussion. We should decide whether to send a letter before distributing this draft more widely in-house to discuss how to parse the message. What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Re: DRAFT Slides for Sempra Meeting Body:: I think the presentation looks good. In the meeting itself I think you should go heavy on the argument that it makes no sense for Sempra shareholders to be in a commodity market as a regulated entity -- the heads they win tails you lose argument. Jeff Dasovich Sent by: Jeff Dasovich 10/13/2000 06:11 PM To: [email protected] Richard Shapiro/NA/Enron@Enron James D Steffes/NA/Enron@Enron Sandra McCubbin/SFO/EES@EES Mona L Petrochko/SFO/EES@EES Susan J Mara/SFO/EES@EES Paul Kaufman/PDX/ECT@ECT cc: Subject: DRAFT Slides for Sempra Meeting Attached for your review is a rough cut at slides we're preparing for the meeting with Sempra next Thursday. Thoughts and comments are appreciated. Please disregard korny title. What should this email be categorized as? [/INST] Document editing/checking/collaboration <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Re: Wyden Bankruptcy Amendment Body:: The amendment was defeated Jeff Dasovich Sent by: Jeff Dasovich 03/14/2001 11:11 AM To: James D Steffes/NA/Enron@Enron Chip Schneider/Enron@EnronXGate Linda Robertson/NA/Enron@ENRON Richard Shapiro/NA/Enron@Enron [email protected] cc: Subject: Wyden Bankruptcy Amendment What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Re: Tax Valuations for YR2000 Body:: Congratulations! Gary Fitch@ENRON on 07/27/2000 12:02:47 PM To: Bill Donovan/EPSC/HOU/ECT@ECT cc: Steven J Kean/HOU/EES@EES Subject: Tax Valuations for YR2000 Bill we hit a home run this morning with HCAD. They have agreed to take my reduced valuation on the Enron fleet. A reduction of $16079000 in taxable value. This results in savings of $482375. That's not all our allocation based on records for operations outside of the state of Texas resulted in additional savings of $1559638. Total savings to our 2000 budget will be $2042013. What should this email be categorized as? [/INST] Personal but in professional context <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Legislative Status Report Week Ending 4/20 Body:: Date: 4/20/01 To: Jan Smutny-Jones Steven Kelly Katie Kaplan Cc: IEP Board of Directors From: Julee Malinowski-Ball Edson + Modisette RE: Legislative Status Report Week Ending 4/20 RECENT EVENTS: -- IEP with the help of Chris Ellison has been at the negotiating table mos= t of the week dealing with the most recent amendments to SB 28x. SB 28x (Sher/Battin) makes various changes to the siting process including many IEP-sponsored proposals. As you will recall two new provisions were added to the bill at the last minute before going to the Assembly Floor dealing with both retrofit schedules and environmental dispatch of generating facilities. Per the direction from IEP member companies IEP has decided not to negotiate on the environmental dispatch issue. If the provision remained in the bill IEP would continue to push the Republicans to hold their opposed position. We were however given the authority to negotiate on the retrofit issue as long as we were only talking about facilities that already have retrofit requirements. I will be faxing out the agreed upon language which in essence says the ARB shall set a schedule for the completion of any mandated retrofits. It does not expand the authority of the air districts and ARB to mandate retrofits under existing law. The schedule would require completion of the retrofits by July 1 2004 or such later date as the ISO determines is necessary to maintain reliability. With these amendments including some clean-up language SB 28x will be voted-on on the Assembly floor on Monday and go to the Senate for concurrence on Tuesday. The final version will include the following IEP-sponsored proposals: ? Conforming the timing of offsets for power plants to Clean Air Act requirements ? Substituting CEQA-style hearings for the trial-like proceedings of the CE= C ? Streamlining the permit process for the modernization of existing power plant sites ? Giving consideration to the positive environmental impacts of a proposed project. ? Improving the timeliness and coordination of state and local agency review. ? Extending the current deadlines for the expedited review process established in AB 970. Since SB 28x is only a first step in making changes to the siting process IEP member should now be thinking about what is next. IEP proposals still on the table include: ? Permitting local agencies to make zoning changes or other decisions for power plants contingent upon CEC CEQA Compliance ? Giving deference to other state and regional agencies ? Easing the threshold for override of local land use requirements. ? Making the ISO responsible for determining interconnection requirements -- Bad news on the =01&California First=018 issue quickly followed the good= news. The CEC staff analysis which said the State can't require builders of new power plants to sell electricity here even as a trade-off for expedited permitting was countered by another staff analysis that says the state can= . Both documents cannot be obtained due to attorney-client privilege. This issue is coming to a head next week with a decision pending by the CEC to include a California First clause on the approval of an expedited AES power plant project. AB 60x (Hertzberg) which ties to the siting process the requirement that a developer enter into a contract to sell power to specified California entities is still poised to be heard in the Senate Energy committee. IEP members company lobbyist should continue to lobby against this measure regardless of the CEC=01s decision on AES although our arguments are definitely strengthened if the addition of the clause at the CEC is denied. -- IEP has finalized negotiations with Senator Burton=01s office on amendm= ents attempting to solve our problem with the eminent domain provision in SB 6x (Burton) which is the State Power Authority measure. Attached is a copy o= f the bill in PDF form. The agreed upon language which clarifies that the Authority=01s purpose is to supplement existing generation activities can= be found on pages 6-7 (Section 3310) 13 (Section 3341.1) and 16-17 (Section3352). Considering the inflammatory remarks made by Senator Burton in the press lately regarding seizing generation assets this was most likely the best we could get. -- The first of Senator Dunn=01s hearings with the Senate Select Committee= to Investigate Price Manipulation of the Wholesale Market occurred this week. This week and next week=01s topics will be to go over previous investigati= ons into market power. The committee heard or will be hearing testimony from: Frank Wolak Chairman Market Surveillance Committee CAISO Eric Hildebrandt Manager Market Monitoring CAISO and Elaine Howle State Auditor. -- The Assembly Electricity Oversight Subcommittee met this week and focused on the issue of natural gas collusion. Testifying before the committee were representatives from Dynegy and El Paso commenting on the rise of natural gas prices and whether illegal market manipulation and collusion occurred. The subcommittee plans on putting together a package o= f bills related to natural gas issues which would be the culmination of the committee=01s hearings over the last two months. This package will be up = for consideration first by the whole special Assembly Energy committee. -- Governor Davis came out this week supporting the construction of the Calpine Metcalf Energy Center the 600-megawatt power plant proposed for th= e San Jose region. The Governor urged the CEC to approve the plant siting so that construction can begin. -- Two long-term contracting bills are scheduled for hearings next week. IEP counsel is currently reviewing AB 57 (Wright) and SB 997 (Morrow) and will comment on their provisions as soon as possible. -- Attached is the most recent legislative tracking reports both the special session and regular session. Please let me know if you need copies of any of these bills. UPCOMING EVENTS: MONDAY April 23rd Assembly Utilities and Commerce Committee AB 57 (Wright) =01) long-term contracting reasonableness review TUESDAY April 24th Senate Energy Committee SB 997 (Morrow) =01) long-term contracting reasonableness review WEDNESDAY April 25th Assembly Appropriations Committee AB 62x (Cohn) =01) California First AB 63x (Florez) =01) Sale of Kern Power Plant THURSDAY April 26th Select Committee to Investigate Price Manipulation of the Wholesale Market Informational hearing on the overview of investigations studies and reports regarding the energy crisis. MONDAY April 30th Senate Appropriations Committee SB 1x (Soto) =01) excess profits tax Assembly Revenue and Taxation Committee AB 128x (Corbett) =01) excess profits tax ON THE ASSEMBLY FLOOR SB 6x (Burton) =01) State Power Authority SB 28x (Sher/Battin) =01) siting --end-- Julee Malinowski-Ball Senior Associate Edson + Modisette 916-552-7070 FAX-552-7075 [email protected] - 2001 Tracking Report.doc - 2001 Tracking Report.special session.doc - What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Enron Mentions - 11/09/01-11/10/01 Body:: Rival to Buy Enron Top Energy Trader After Financial Fall The New York Times 11/10/01 Regulators Struggle With a Marketplace Created by Enron The New York Times 11/10/01 COMPANIES & FINANCE INTERNATIONAL - Dynegy agrees to $7.8bn rescue bid for = Enron. Financial Times 11/10/01 COMPANIES & FINANCE - INTERNATIONAL - Accountancy put back under the spotli= ght. Financial Times 11/10/01 LEX COLUMN - Layed to rest. Financial Times 11/10/01 COMPANIES & FINANCE INTERNATIONAL - Company troubles leave Houston with a p= roblem. Financial Times 11/10/01 Dynegy to acquire Enron in $8.9 billion stock deal / New giant moves out of= shadow Houston Chronicle 11/10/01 The Nation Smaller Rival to Acquire Teetering Enron Power: Energy giant tha= t pressed for deregulation in California is on the brink of collapse. Los Angeles Times 11/10/01 Dynegy to acquire Enron in $8.9 billion stock deal / New giant moves out of= shadow Houston Chronicle 11/10/01 POWER PLAY / Lay opened energy firms to work in new markets Houston Chronicle 11/10/01 POWER PLAY / Purchase elevates Watson's low profile Houston Chronicle 11/10/01 Dyenegy to acquire Enron in $8.9 billion stock deal / Many fear `unique' pr= oblems Houston Chronicle 11/10/01 Enron Accepts $8 Billion Buyout Offer From Dynegy Energy Giant Was Forced = to Negotiating Table After Disclosing That It Had Overstated Earnings The Washington Post 11/10/01 The Nation NEWS ANALYSIS A Visionary Fallen From Grace Los Angeles Times 11/10/01 DYNEGY TIMELINE Houston Chronicle 11/10/01 POWER PLAY / ENRON TIMELINE Houston Chronicle 11/10/01 POWER PLAY / Enron had been a political heavyweight / Critics decried influ= ence of Ken Lay in White House Houston Chronicle 11/10/01 POWER PLAY / Sale suddenly switches office outlook downtown Houston Chronicle 11/10/01 POWER PLAY / Enron Field name may fall as quickly as energy empire Houston Chronicle 11/10/01 Market forces: Worries over Royal Bank's Enron exposure The Guardian 11/10/01 Dynegy snaps up Enron for $9.5bn The Times of London 11/10/01 UK jobs on the line Daily Mail 11/10/01 Dynegy to get prime downtown real estate in Enron deal Associated Press Newswires 11/10/01 Enron India Pwr Unit Sale Faces Review After Dynegy Deal Dow Jones Energy Service 11/10/01 Talks to salvage multibillion dollar Enron India project goes into third da= y Associated Press Newswires 11/10/01 All eyes in electric industry on Texas as deregulation nears Associated Press Newswires 11/10/01 Enron Says It's Too Soon to Quantify U.K. Job Cuts (Update1) Bloomberg 11/10/01 Dynegy to Buy Enron for $23 Billion in Stock Debt (Update9) Bloomberg 11/09/01 Dynegy announces $8 billion deal to buy larger rival Enron Associated Press Newswires 11/09/01 USA: UPDATE 3-Dynegy to acquire Enron for $9 bln. Reuters English News Service 11/09/01 Enron not California's largest power supplier but merger could affect pric= es Associated Press Newswires 11/09/01 Dynegy-Enron merger could mean name change for Enron Field Associated Press Newswires 11/09/01 Dynegy Buy Of Enron Valued At $23B-$24B With Debt Dow Jones News Service 11/09/01 Chronology of Enron Corp.'s history Associated Press Newswires 11/09/01 Fitch Takes Rating Action on Enron & Dynegy on Merger News Business Wire 11/09/01 ChevronTexaco to Invest $2.5 Billion in Dynegy PR Newswire 11/09/01 Business/Financial Desk Section A Rival to Buy Enron Top Energy Trader After Financial Fall By ALEX BERENSON and ANDREW ROSS SORKIN 11/10/2001 The New York Times Page 1 Column 2 c. 2New York Times Company With its stock plunging and its finances in doubt the world's largest ener= gy trader the Enron Corporation agreed to be acquired yesterday by the ri= val Dynegy Inc. for about $9 billion in stock and the assumption of $13 bil= lion in debt.=20 The deal is an extraordinary turnabout for Enron a Houston-based company t= hat had been a driving force behind electricity deregulation nationwide. Its chairman Kenneth L. Lay a big contributor to the Republican Party pr= ovided political influence while its former chief executive Jeffrey K. Sk= illing helped create markets for the trading of electricity and natural ga= s. But last winter when California's effort to deregulate the electricity = market led to soaring power prices and rolling blackouts Enron was the sub= ject of much criticism and political anger.=20 Recent disclosures of discrepancies in Enron's financial statements and an = investigation by the Securities and Exchange Commission caused the shares t= o plunge this week to their lowest level in a decade. As other companies be= came wary of doing business with it Enron -- also facing a potential cash = squeeze -- apparently had little choice but to find a buyer and a deal was= hastily cobbled together this week.=20 For critics who had complained about Enron's market power and its dominance= the combination poses additional concerns. Dynegy's acquisition of Enron = will be reviewed by state and federal agencies led by the Justice Departme= nt and the Federal Energy Regulatory Commission. Analysts said today that t= hey expected scrutiny of the combined companies' holdings in California wh= ere Dynegy owns power-generating plants and Enron accounts for much of the = trading of natural gas -- fuel for the state's electric power plants.=20 Buying Enron at a deep discount -- it has lost $60 billion in market value = this year -- could make Dynegy the dominant trader of electricity and natur= al gas. But the agreement carries big risks as well. Along with Enron's gas= pipelines and high-technology trading floor Dynegy will take on Enron's s= ubstantial debt and a web of complex transactions that Enron has spun over = the last decade.=20 In addition to the $13 billion in debt that Enron carries on its books it = has guaranteed at least $4 billion in off-balance sheet loans and the hidd= en debt could total as much as $10 billion said Carol Coale a stock analy= st with Prudential Securities.=20 Charles L. Watson Dynegy's chairman and chief executive said yesterday th= at Dynegy could sort through Enron's tangled finances. ''We know the compan= y well'' Mr. Watson said. ''It's not like we just started fresh. I'm confi= dent that it's as solid as we thought it was.''=20 The new company will combine Enron's 25000-mile natural gas pipeline syste= m with the large number of power plants that Dynegy owns worldwide as well= as Illinois Power a Dynegy subsidiary that serves 650000 customers in Il= linois. But its most important asset will be its trading desk. It will be t= he largest energy trader in the nation trading more than twice as much pow= er and natural gas as its closest competitors.=20 Mr. Watson said the company did not expect to sell significant properties a= nd that the deal should pass regulatory scrutiny. ''There's really not a lo= t of overlap in assets'' he said.=20 Mr. Watson and Steve Bergstrom Dynegy's president will hold those positio= ns in the new company which will be called Dynegy and remain in Houston. M= r. Lay who created Enron in the mid-1980's will not have any role in the = combined company's daily operations. He has been asked to join its board bu= t has not provided an answer. ''The last three weeks haven't been a lot of = fun'' he said.=20 In a statement announcing the agreement yesterday afternoon Mr. Watson sai= d he was confident that the merger would produce a strong new company. ''En= ron is the ideal strategic partner for Dynegy'' Mr. Watson said. ''We will= keep a strong balance sheet and straightforward financial structure as key= priorities.''=20 To shore up Enron's finances Dynegy will immediately put $1.5 billion into= Enron through ChevronTexaco the giant oil company which already owns 27 = percent of Dynegy. Another billion dollars will be injected once the deal i= s completed.=20 Investors appeared comfortable yesterday that Dynegy could make the deal wo= rk. After falling $3 to $33 on Wednesday when the companies first said t= hey were in discussions Dynegy rose $5.76 on Thursday and yesterday to clo= se the week at $38.76.=20 ''On paper it works'' Ms. Coale of Prudential said. ''The combined compan= y would be the leading trader the market leader in most of their businesse= s.'' Ms. Coale who has a sell rating on Enron and a buy rating on Dynegy = said she planned to keep her buy rating on Dynegy.=20 As it works to have the deal approved Dynegy will have to persuade Enron's= traders to stay with the combined company. The pain of the stock's 90 perc= ent plunge this year will not be equally shared. Some Enron employees have = held onto their shares and seen their retirement accounts eviscerated. Mean= while Mr. Lay Mr. Skilling and other former and current executives sold h= undreds of millions of dollars in Enron stock in 2000 and this year.=20 The companies also have very different corporate cultures. Dynegy emphasize= s teamwork while Enron is more competitive said Ehud Ronn director of th= e Center for Energy Finance Education and Research at the University of Tex= as. Even before the merger was announced Enron had lost some of its employ= ees to other energy trading companies Mr. Ronn said.=20 Some investors and analysts say that the problems with Enron's finances may= extend beyond the partnerships that have been the subject of Wall Street's= scrutiny the last month. James Chanos a short-seller who has been one of = Enron's most vocal critics said there was increasing evidence that Enron's= energy trading operations were not as profitable as the company had said. = ''There appears to be a culture at Enron of aggressively booking profits an= d deferring or obscuring losses'' Mr. Chanos said.=20 On Thursday Enron said in a filing with the S.E.C that it had overstated i= ts earnings by almost $600 million over the last five years. Mr. Chanos sai= d more restatements were possible noting that the filing disclosed partner= ships had been used to hedge almost $1 billion in losses in 2000 and this y= ear. So far the losses from those partnerships remain off Enron's financia= l statements Mr. Chanos said.=20 Enron's stock had been under pressure for most of this year as the company= ran up large losses with failed efforts to expand outside its core trading= operation. In August Mr. Skilling resigned as chief executive and Mr. La= y resumed control of daily operations.=20 Still the company appeared financially sound until last month when it dis= closed that its shareholders' equity a measure of the company's value dro= pped by $1.2 billion because of deals disclosed only hazily in its financia= l statements. The announcement unnerved investors who wondered whether Enr= on had found ways to inflate its profits and move debt off its balance shee= t and led the S.E.C. to begin an investigation.=20 Mr. Lay tried to reassure investors that Enron's finances were in order and= that its businesses remained strong. But the last three weeks have brought= a series of damaging revelations about partnerships that Enron formed with= some of its top executives including its former chief financial officer = Andrew S. Fastow.=20 With questions mounting the major credit-rating agencies began to downgrad= e Enron's debt putting additional pressure on the company. If Enron's debt= rating falls below investment grade it would be forced to repay $3.3 bill= ion in loans that it had guaranteed.=20 To strengthen its balance sheet and bolster its stock Enron turned to big = investors like Warren E. Buffett in search of billions of dollars of financ= ing. When the financing did not quickly appear its stock fell further.=20 By this week some major energy traders were refusing to extend credit to E= nron worrying that the company would be unable to make good on its contrac= ts. The Mirant Corporation an Atlanta-based power plant owner and electric= ity trader sharply curtailed its trading with Enron this week. ''We're tra= ding with them on a very limited basis'' said James Peters a Mirant spoke= sman. ''It's not business as usual.''=20 On Wednesday Enron's stock fell as low as $7 a share its lowest level in = more than a decade. That day news of the Enron and Dynegy talks leaked out= .=20 By late Wednesday the boards of the two companies had tentatively agreed t= o a deal. But Dynegy refused to go ahead until it learned whether Enron's c= redit rating would remain investment grade and was comfortable with the eff= ect of the deal on its own rating. The deal moved forward yesterday after D= ynegy was assured Enron's debt was not in danger of being lowered to junk s= tatus soon after the deal was announced according to company officials.=20 Dynegy and Enron had provided Standard & Poor's and Moody's Investors Servi= ce the main credit agencies with statements showing them what a combined = company might look like and asked the ratings agencies for an expedited rev= iew of the transaction Mr. Watson said.=20 Under the deal Enron shareholders will receive 0.2685 share of Dynegy stoc= k for each Enron share or $9.80 based on Dynegy's closing price on Thursda= y. Enron's stock gained 22 cents yesterday to $8.63.=20 ''I never thought our stock price would be at this level'' Mr. Lay said ye= sterday.=20 Enron's shareholders will own only 36 percent of the combined company and = Dynegy will name at least 11 members of the company's 14-member board.=20 If the deal falls apart Enron or Dynegy will have to pay a breakup fee of = $350 million.=20 To protect Dynegy's and ChevronTexaco's cash infusion the money will go to= an Enron unit that owns the Northern Natural Gas Pipeline. If the merger i= s not completed Dynegy will have the right to buy the unit.=20 An army of bankers and lawyers advised the companies. Lehman Brothers Inc. = acted as financial adviser and Baker Botts and Akin Gump Strauss Hauer &= Feld acted as counsel for Dynegy. J. P. Morgan & Company and Salomon Smith= Barney acted as financial advisers for Enron and Vinson & Elkins and Weil= Gotshal & Manges acted as the company's counsel. Pillsbury Winthrop served= as counsel to ChevronTexaco. Chart: ''A Marriage of Strength and Weakness'' A merger of Enron and Dynegy= would bring together two of the country's biggest energy companies -- and = save Enron from potential collapse. Graph tracks the weekly closes of Enron= shares from 1999 through 2001. Top North American gas marketers SALES OF = BILLION CUBIC FEET PER DAY* Enron: 24.6 Reliant: 13.2 Duke Energy: 12.8 BP:= 12.3 Mirant: 11.8 Dynegy: 10.9 Top North American power marketers SALES O= F MILLION MEGAWATT HOURS* Enron: 212.5 American Electric Power: 134.5 Duke = Energy: 118.1 Reliant Resources: 86.1 PG&E National Energy Group: 73.2 Dyne= gy: 70.1 *Figures are for the 2nd quarter of 2001. (Sources: Bloomberg Fina= ncial Markets Simmons & Co. Natural Gas Week)(pg. C2)=20 Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 Business/Financial Desk Section C Regulators Struggle With a Marketplace Created by Enron By JEFF GERTH with RICHARD A. OPPEL Jr. 11/10/2001 The New York Times Page 1 Column 2 c. 2001 New York Times Company WASHINGTON Nov. 9 -- For years the Enron Corporation used its political m= uscle to build the markets in which it thrived pushing relentlessly on Cap= itol Hill and in bureaucratic backwaters to deregulate the nation's natural= gas and electricity businesses.=20 Its achievement as one Enron executive said today in creating a ''regulat= ory black hole'' fit nicely with what he called the company's ''core manage= ment philosophy which was to be the first mover into a market and to make = money in the initial chaos and lack of transparency.'' Now Wall Street's dissatisfaction with Enron's secretive ways has delivere= d the company into the arms of its much smaller Houston rival Dynegy Inc.= in a deal worth about $9 billion in stock and the assumption of $13 billio= n in debt. The combination of the two companies energy experts and lawmake= rs said today poses a novel set of challenges for regulators still struggl= ing to grasp the complexities of the marketplace that Enron invented.=20 ''We're in a supersonic-speed era of electronic trading with a horse-and-bu= ggy-era regulatory system to protect consumers'' said Representative Edwar= d J. Markey a Massachusetts Democrat who has devised legislation to close = the regulatory gap.=20 Dynegy's acquisition of Enron is expected to be reviewed by numerous state = and federal agencies led by the Justice Department the Federal Trade Comm= ission and the Federal Energy Regulatory Commission.=20 Analysts said today that sharp scrutiny would be given to the combined comp= anies' holdings in California where Dynegy owns generating plants and Enro= n controls a large part of the market for trading natural gas -- the fuel f= or a big share of the state's electric power plants.=20 ''Dynegy would now have a greater ability to take the dominant position in = gas and raise the price of electricity'' said Frank Wolak a professor of = economics at Stanford University.=20 Mr. Wolak a consultant to the Justice Department on a 1999 antitrust case = that led to limits on another merger of electricity and natural gas compani= es in Southern California said he was skeptical that regulators were up to= the task of reviewing today's deal.=20 The transaction ''is something the Department of Justice needs to look at = and they are going to have a hard time looking at'' Mr. Wolak said. ''And = it's beyond the ability of the F.E.R.C. to look at.''=20 Pat Wood -- named chairman of the federal energy commission earlier this ye= ar with the backing of Kenneth L. Lay the chairman of Enron -- acknowledge= d in an interview today that the agency had ''a long way to go'' in matchin= g the sophistication of the companies it regulates.=20 But he said that the commission had made great strides in grappling with th= e new risk management techniques pioneered by Enron Dynegy and other energ= y companies. It is hiring more experts he said adopting more restrictive = rules on how much ''market power'' one party can control and requiring more= disclosure of certain energy transactions.=20 In an interview this evening Charles L. Watson the chairman of Dynegy sa= id he did not believe that regulators reviewing the deal with Enron would r= equire the sale of any assets. ''We haven't really identified any pitfalls = that require any sort of asset divestiture'' he said. ''There's not really= any overlap.''=20 A senior executive at one of Enron's largest energy-trading rivals disagree= d. ''I don't think this deal gets through unscathed'' he said today. ''I'm= sure the Justice Department and the F.T.C. will look closely at the pretty= substantial concentration of market power these companies will have in the= energy-trading area.''=20 Enron is mainly a trader of natural gas and electricity -- indeed the bigg= est player in both those markets -- and it also owns a network of gas pipel= ines. Dynegy processes and sells natural gas and generates and sells electr= icity. Each company owns a local electric utility too: Dynegy owns Illinoi= s Power in Decatur Ill. while Enron owns Portland General Electric in Por= tland Ore. but last month announced plans to sell it to another Oregon ut= ility.=20 For a decade as it transformed itself from a gas pipeline operator into th= e nation's biggest energy trader Enron enjoyed unalloyed lobbying success = in Washington and the enthusiastic backing of Wall Street.=20 In the early months of the Bush administration Mr. Lay -- whose company wa= s one of the biggest financial backers of George W. Bush's presidential cam= paign -- played a prominent and some said unusual role in helping the Whi= te House pick nominees to the federal energy commission. Enron executives m= et with Vice President Dick Cheney whose energy task force backed many of = the deregulatory initiatives pushed by Mr. Lay.=20 Now ''the company has become a pariah'' an Enron executive said today. ''= The Bush administration doesn't want to have anything to do with us.''=20 The problems began with the energy crisis in California where Enron's outs= poken defense of deregulation even more than its electricity trading activ= ities made the company a favorite whipping boy of politicians and consumer= advocates. In the financial markets meanwhile Enron's confusing disclosu= res tolerated when its stock was soaring drew disdain as the calming of t= he energy storms in California and other parts of the country beat the shar= es down starting last spring.=20 ''Enron fell victim to their own inconsistencies on transparency'' Mr. Wol= ak said. As California officials sought to understand why energy prices had= soared out of control he said Enron's ''view was that we want everybody'= s data but if you want ours get a subpoena.''=20 Energy executives and regulators said that sort of arrogance had long marke= d Enron's attitude about government oversight.=20 Electricity sales had for decades been the job of local utility companies = operating as monopolies and selling power at regulated rates within their s= ervice areas. A few entrepreneurs led by Mr. Lay conceived a different mo= del in which power could be sold by generators or middlemen to big corporat= e users or utilities in faraway regions at whatever price the market would= bear.=20 In the early 1990's Congress -- under heavy lobbying by Enron -- passed le= gislation that began to open up electricity sales to marketers. Before long= Enron became one of the first companies to receive government approval to= sell electricity at market rates. The market for interstate sales of natur= al gas had been freed up a few years earlier and critics complained that t= raders like Enron were gleaning their profits by stoking volatility in gas = prices.=20 In the mid-1990's independent gas producers backed legislation in Congress= to allow the creation of a co-operative marketing organization which the= y hoped would have helped stabilize prices.=20 Raymond Plank the chairman of the Apache Corporation a gas producer based= in Houston said that the big gas marketing and trading companies includi= ng Enron successfully lobbied to kill the plan leaving prices as volatile= as ever.=20 ''It was a great concept'' Mr. Plank said. ''We could have headed off the = problems we have today.''=20 Enron's final lobbying success came last year. With a strong push from the = company's lobbyists Congress passed futures trading legislation that exemp= ted Internet energy trading platforms like EnronOnline the industry leader= from oversight by the Commodity Futures Trading Commission. Enron takes t= he other side of trades on its exchange. In traditional markets like the Ne= w York Mercantile Exchange which remain subject to oversight the exchange= acts as a middleman between buyers and sellers.=20 Under Mr. Watson Dynegy has been less of a pathbreaker than Enron and tho= ugh California politicians denounced it too as a profiteer during the ene= rgy crisis most analysts say it has been less aggressive than Enron in bot= h its business practices and its lobbying.=20 Indeed the rival energy-trading executive today predicted ''a huge culture= clash'' as the Houston neighbors merge. ''Blood will flow in Houston over = the integration of the trading operation'' he said.=20 But regulators may find Dynegy easier to deal with.=20 Earlier this year the federal energy commission asked for comments on whet= her it should tighten scrutiny of dealings between natural gas pipelines an= d energy-trading shops owned by the same company.=20 Enron wondered what all the bother was. ''Would stricter rules prevent real= affiliate abuse that current rules do not'' it wrote in a regulatory fili= ng ''or would they instead merely restrict the activities of some of the m= ore successful participants in the marketplace?''=20 Dynegy by contrast painted a grim picture and invited regulators to crack= down. ''Abuses abound'' it said ''because of financial windfalls diffic= ulty of detection lengthy investigations and increased complexity of the m= arket.'' Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 COMPANIES & FINANCE INTERNATIONAL - Dynegy agrees to $7.8bn rescue bid for = Enron. 11/10/2001 Financial Times (c) 2001 Financial Times Limited . All Rights Reserved THAL LARSEN.=20 Dynegy last night agreed a rescue bid of about $7.8bn for Enron after the = rival energy group narrowly escaped having its credit ratings cut to junk s= tatus. If successful the all-stock bid will allow Dynegy to take over a pioneer o= f energy trading that is many times its size in the electricity and gas mar= kets while also providing urgently-needed liquidity to the fallen star.=20 Dynegy offered almost 0.27 of its own shares per Enron share. Dynegy's stoc= k closed at $38.76 up 6.2 per cent yesterday valuing the bid at $7.8bn = or 21 per cent above Enron's closing price. Enron was up 2.6 per cent at $8= .63.=20 The combined company will also receive an immediate cash injection of $1.5b= n from ChevronTexaco which owns 27 per cent of Dynegy and a further $1bn = from ChevronTexaco when the deal closes.=20 The infusion is expected to avert a funding crisis caused by Enron's fallin= g trading volumes and its customers' demands for collateral which followed = a series of blows to its reputation.=20 Dynegy will use the $1.5bn infusion to acquire preferred stock collateralis= ed by Enron's pipeline assets in return ChevronTexaco will be granted righ= ts over $1.5bn of Dynegy stock.=20 JP Morgan Chase and Citigroup demanded similar security for a $1bn loan ext= ended this month.=20 Moody's Investors Service cut its rating on Enron's senior unsecured debt y= esterday morning from Baa2 to Baa3 - just one notch above junk status. Any = deeper downgrade would have forced Enron to sell stock to cover about $3.3b= n of obligations and could have deterred Dynegy. Moody's kept the ratings = under review for further downgrades given the potential for increased mar= gin requirements from counterparties.=20 However the agency said it would treat a substantial capital injection as = a stabilising event. The deal is likely to face intense regulatory scruti= ny given the large share the combined companies would have in the energy m= arkets.=20 The bid represents a reversal of fortune for Enron which will effectively = be humbled by its smaller Houston rival. However some analysts expressed r= eservations as Enron faces a Securities and Exchange Commission inquiry in= to off-balance sheet transactions and a restatement of its accounts has ye= t to clear up questions about the true state of its financial dealings.=20 Carol Coale of Prudential Securities said: We believe that either Dynegy= had material exposure to Enron's trading contracts or that it is trying to= rescue its competitor by saving the liquidity in the commodities markets.= =20 Reporting by Andrew Edgecliffe-Johnson and Robert Clow in New York Sheila = McNulty in Houston and Peter Thal Larsen in London .. See Lex.=20 (c) Copyright Financial Times Ltd. All rights reserved.=20 http://www.ft.com. Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 COMPANIES & FINANCE - INTERNATIONAL - Accountancy put back under the spotli= ght. By ADRIAN MICHAELS and RICHARD WATERS. 11/10/2001 Financial Times (c) 2001 Financial Times Limited . All Rights Reserved Arthur Andersen Enron's auditor is understood to have approved the contro= versial off-balance sheet arrangements that lie at the heart of the energy = company's decision to overhaul its accounts earlier this week.=20 However in at least one case the auditor may not have been given full info= rmation while the involvement in the disputed transactions of four people = employed by Enron has only recently come to light. Andersen has already bee= n hit by lawsuits from Enron shareholders filed in Oregon and Harris County= Texas - a popular venue among plaintiffs' lawyers given its history of bi= g jury awards. The legal actions are the latest blow to an auditing profession still reeli= ng in the aftermath of a series of accounting scandals that have blown up i= n recent years. On Wednesday Waste Management said Andersen would pay $20m= to settle a suit brought by shareholders in the trash hauler alleging prof= essional malpractice. The Securities and Exchange Commission has already ag= reed a $7m settlement with Andersen over the alleged audit fraud.=20 The Enron actions could also turn out to be one of the first tests of new a= uditor independence rules set by the SEC. The energy company paid Andersen = $25m for its audit last year and $27m for other services.=20 An Andersen spokesman refused to comment on whether the auditor had vetted = the complex off-balance sheet arrangements used by Enron to manage its trad= ing risks and offload debt. However he added: We do help companies unders= tand accounting rules and how to apply them.=20 In a regulatory filing on Thursday Enron indicated that its decision to re= state its accounts to include two off-balance companies was based on curre= nt information suggesting that full details had not been available before= .=20 However a third accounting change was based on a new assessment Enron s= aid raising questions about the auditor's earlier judgement.=20 Under the previous commissioner Arthur Levitt the SEC attacked companies t= hat indulged in earnings management and accountants who suffered from con= flicts of interest between audit and consulting work. The accounting firms = say audit and consulting work can co-exist.=20 (c) Copyright Financial Times Ltd. All rights reserved.=20 http://www.ft.com. Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 LEX COLUMN - Layed to rest. 11/10/2001 Financial Times (c) 2001 Financial Times Limited . All Rights Reserved Being in the business Dynegy should have a better idea than other possible= buyers of what it is taking on. Presumably it has been given a fuller and = franker explanation of Enron's off-balance-sheet mess than its investors b= ut it can scarcely have been able to carry out what normally counts as due = diligence.=20 Moody's decision and S&P's indecision meant Enron kept its investment grade= and seems to have got the deal done. Do ratings agencies really provide in= dependent analysis at these times? If Dynegy injects $1.5bn of cash up fron= t courtesy of Chevron Texaco and secured on the pipeline assets that aver= ts the immediate crisis. An exchange ratio of 0.27 would value Enron's stoc= k at $8bn. At about $10.67 a share that is a 27 per cent premium but more = pertinently compares with $34 on the eve of the October earnings call and $= 83 on New Year's Day. There are no rivals for this year's prize for shareho= lder value destruction. Others have gone but did Ken Lay Enron chief exec= utive know what was going on? Whatever the answer it reflects poorly on h= im. The merger raises antitrust questions. Dynegy might be a fifth of Enron's s= ize but it is the second biggest energy trader. But while Enron has few fr= iends in the public markets it still has some in high places. Dynegy's offe= r puts a floor beneath Enron's share price. Paying bottom dollar provides s= ome insurance for its shareholders. As more emerges on the financial struct= ure and the state of the core trading business the question is whether tho= se who declined the opportunity start to take an interest or pat themselves= on the back.=20 (c) Copyright Financial Times Ltd. All rights reserved.=20 http://www.ft.com. Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 COMPANIES & FINANCE INTERNATIONAL - Company troubles leave Houston with a p= roblem. By SHEILA MCNULTY. 11/10/2001 Financial Times (c) 2001 Financial Times Limited . All Rights Reserved COMPANIES & FINANCE INTERNATIONAL - Company troubles leave Houston with a p= roblem - Energy trader has played a vital role in its home city writes She= ila McNulty.=20 When Sam Soliman senior vice-president of Koch Industries the second-larg= est privately held company in the US remarked earlier this year on the bui= lding boom in downtown Houston he could not help but be alarmed about the = city's prospects: I always get worried when I see a lot of new constructio= n. He was right to be so circumspect. In a matter of months three of Houston'= s corporate landmarks - Compaq Computer Continental Airlines and Enron - h= ave come under pressure.=20 Compaq is in the process of being acquired by Hewlett-Packard Continental = has had to lay off 12000 employees and energy trader Enron has gone from = being the leader of Houston's business community to its biggest liability.= =20 The fourth most populous city in the US is reeling from the latest demise a= mong its corporate citizens.=20 It's a body blow says Charlie Savino executive vice-president of the Gr= eater Houston Partnership a business organisation.=20 Enron is not only one of the city's biggest employers it has led the redev= elopment of downtown Houston making it somewhere pleasant to live for the = first time in decades.=20 At the centre of its efforts is the Enron Field which the company financed= to bring professional baseball - and its fans - back into the city centre.= =20 On the periphery are Enron's contributions to Houston's social development.= =20 The company matches all employee donations made to non-profit organisations= for up to $15000 per employee per year.=20 It also makes donations to non-profit organisations for which its employees= offer their time.=20 Kenneth Lay Enron chief executive has long been the go-to guy to get so= mething done in Houston.=20 Enron's status brought Houston status as the biggest energy trader in the = US it made the city the centre of energy trading. EnronOnline its interne= t trading platform has drawn some of the brightest minds to the city to wo= rk on what has become the world's biggest web-based transaction system.=20 Enron was so secure in its standing that it was building a new 40-storey of= fice building adjoining its 50-storey tower.=20 Beside that bulldozers and cranes have been putting the finishing touches = to a massive new parking garage.=20 Employees had just started to move into the new towers when a series of dis= closures about Enron's financial position began to undermine the company an= d send investors fleeing for cover.=20 Enron staff once known for being both brilliant and arrogant enough to pro= ve it are coping with their dramatic reversal in status in a wide variety = of ways.=20 As they left work yesterday many brushed by in their smart-casual polo shi= rts and khakis refusing to say a word about what was unfolding.=20 One man looking exhausted braved a grin and said: Just keep smiling. The= world goes on. Companies go through problems all the time just like we do= in personal life.=20 One woman felt she had to laugh at the irony: she moved to Enron last year = to protect herself from job losses in the more traditional energy businesse= s. At that time Enron was considered the safest place to be in the industr= y.=20 That Dynegy another Houston-based energy trader has emerged as Enron's sa= viour is being received positively by staff who praised its technology and= processes.=20 The Houston business community may be hoping that a merged group might be b= etter for the city than a stand-alone Enron as a combined business would b= e bigger and stronger.=20 But John Olson of Sanders Morris Harris a local investment banking and se= curities firm in Houston notes that a merger is likely to lead to job loss= es as assets are sold and businesses are streamlined.=20 Already he says many Houston citizens big holders of Enron's stock had = lost out on its share slide. The ripple effects on the city will be immeas= urable he says.=20 (c) Copyright Financial Times Ltd. All rights reserved.=20 http://www.ft.com. Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 NEWS Dynegy to acquire Enron in $8.9 billion stock deal / New giant moves out of= shadow LAURA GOLDBERG Staff 11/10/2001 Houston Chronicle 3 STAR 1 (Copyright 2001) Enron Corp. a mainstay of Houston's corporate landscape that helped turn t= he city into a global energy trading powerhouse will disappear in a turn o= f events that would have been unthinkable a month ago.=20 In a deal that will unite two hometown rivals Dynegy announced Friday even= ing it would buy the beaten-down Enron in a stock deal worth almost $8.9 bi= llion plus the assumption of $12.8 billion in debt. The purchase will end Enron's reign as the world's largest energy trader c= atapulting a company to the top that in many ways has been in Enron's shado= w.=20 This could be viewed as Dynegy being the savior of industry in rescuing En= ron the largest energy trader and restoring market liquidity said Carol= Coale a stock analyst with Prudential Securities in Houston who follows = both companies.=20 A much bigger Dynegy - with annual revenues exceeding $200 billion and $90 = billion in assets including pipelines and power plants - will emerge with C= huck Watson its current chairman and chief executive keeping those roles = in the combined company.=20 Layoffs are expected but executives said it was too early to say how many.= Dynegy has almost 1600 employees in Houston Enron has more than 7000 he= re.=20 For Watson the deal is all about growth.=20 It accelerates our strategy some three or four years he said shortly aft= er the deal was announced. This is just a financial bonanza really for bot= h companies.=20 This isn't the way Ken Lay Enron's chairman and chief executive ever thou= ght his years of work would turn out.=20 This would not have been my dream case Lay said in an interview with the= Chronicle shortly after the deal was announced. I would not even have con= templated it three or four weeks ago.=20 Lay has been offered a seat on the combined company's board but hasn't dec= ided yet whether to take it. He won't have any management role once the dea= l closes.=20 He helped take Enron from a staid pipeline company created from a 1985 merg= er to a trading machine that wheels and deals in gas electricity financia= l contracts used to help companies manage risk and other commodities.=20 But Lay said he believed selling Enron was the best option for its sharehol= ders employees and the city considering the company's current battered sta= te.=20 This is the best way to provide certainty to protect this wholesale market= ing and trading franchise which is so valuable he said adding that Enron= looked at two or three other alternatives as it tried to strengthen its ba= lance sheet and add cash into its operations.=20 Lay said it's not his preference to sell Enron and see its name disappear.= =20 It happens to be the best alternative said Lay. I'm a realist. I knew w= hat needed to be done.=20 Among Enron's troubles: The Securities and Exchange Commission is investiga= ting business deals Enron did with two investment partnerships run by its f= ormer chief financial officer its credibility on Wall Street is close to z= ero a pile of shareholder lawsuits and its credit rating which it relies = on to successfully run its core trading business has been lowered.=20 While other questions had hung over Enron earlier this year the path to it= s end really began Oct. 16 when the company released third- quarter earnin= gs and reported significant financial losses related to the two investment = partnerships.=20 That set in motion a spiral of events leading to Friday's announcement.=20 Watson called Lay on Oct. 24 to see if he could do anything to help dispel = rumors that Dynegy had stopped trading with Enron.=20 That conversation led to a meeting at Lay's house three days later at whic= h the two started talking about a deal.=20 As these things go the deal came together quickly especially with so many= question marks hanging over Enron.=20 I think it's important to understand that Ken and I have known each other = for some 20 years Watson said. We have a good understanding of what they= do and how they do it. We knew that their franchise was solid.=20 Under the terms of the deal which is expected to close in six to nine mont= hs:=20 Enron shareholder's get 0.2685 share of Dynegy per Enron share. Based on Fr= iday's closing stock prices of $8.63 for Enron and $38.76 for Dynegy Dyneg= y is paying $10.41 an Enron share - or a 21 percent premium. That's a far c= ry from late January when Enron's closing price hit $82 a share.=20 Dynegy will immediately inject $1.5 billion in Enron to help shore it up. D= ynegy will get that money from ChevronTexaco which owns about 26 percent o= f Dynegy.=20 In return for that money Dynegy will get preferred stock and other rights = in Enron's Northern Natural Gas pipeline system. Should the deal not close= Dynegy has the right to buy all of Northern Natural Gas.=20 At the deal's closing ChevronTexaco will provide another $1 billion to the= combined company.=20 Enron will have the right to designate at least three board members for the= combined company which will have 14 board seats.=20 Steve Bergstrom Dynegy's president and Rob Doty Dynegy's chief financial= officer will keep those roles in the new company. Greg Whalley currently= president and chief operating officer of Enron will become an executive v= ice president at the combined company.=20 The deal contains a $350 million breakup fee that Dynegy would get if anoth= er suitor came in and Enron decided to take a better offer.=20 Watson also said the deal contains escape clauses to protect Dynegy should = it be necessary but he doesn't expect any surprises.=20 We looked under the hood and guess what it's just as strong as we thought= it was he said.=20 The deal must be reviewed by a variety of government regulators though Wat= son isn't expecting any antitrust problems.=20 Dynegy will talk to analysts and investors on a conference call Monday att= empting to convince them of the deal's value. Dynegy expects the merger to = result in $400 million to $500 million in annual savings.=20 On paper it looks good said Coale the analyst. We still remain concer= ned about the uncertainties that shroud Enron . . . The risks continue to b= e what we don't know about Enron. We just hope Chuck and his team do all th= e necessary due diligence which is going to take more than a couple weeks.= =20 There are also concerns about merging two different cultures.=20 Looking at cultures the two companies are very different she said. Dyn= egy is a little bit of a fraternity. Chuck started this company and I'm sur= e he has a heartfelt emotion toward making things work at Dynegy. Enron is = a mercenary aggressive cutthroat culture.=20 While both are energy traders Enron has pursued a strategy of shedding ass= ets while Dynegy has continued to make asset purchases.=20 At the start of the year Enron was still heralded as an innovator for othe= rs to emulate. Since a series of problems began chipping away at Enron's i= mage.=20 But such concerns were mostly pushed aside for as long as the company's sto= ck price performed well and its core energy trading business turned out hig= her and still-higher profits.=20 The company's woes became more serious and quickly multiplied after it made= troubling financial disclosures in its third-quarter earnings report Oct. = 16.=20 It disclosed that day it had taken a $35 million loss and reduced sharehold= ers equity by $1.2 billion related to ending business dealings with two inv= estment partnerships formerly run by Andrew Fastow its chief financial off= icer.=20 The disclosures heightened Wall Street's ongoing concerns that Enron's fina= ncial reporting was too difficult to understand and skimped on details. It = also led to fears that Enron would be on the hook for billions of dollars r= elated to other financial vehicles.=20 Days later Enron revealed that the SEC was investigating transactions betw= een Enron and the partnerships called LJM Cayman and LJM2 Co-investment. I= t also replaced Fastow and has been hit with a growing number of shareholde= r lawsuits.=20 Then the company's credit rating was downgraded which raised questions ab= out its ability to manage its core energy trading business.=20 As Wall Street's questions grew Enron retreated into silence leaving anal= ysts and investors to speculate on worst-case scenarios which fed fears th= at company was facing a cash-crunch and caused investors to keep dumping th= e stock.=20 That in turn led some of Enron's trading partners to shift business elsewh= ere and raise their credit requirements to do business with Enron which in= turn raised even more fears.=20 Thursday Enron said it is restating its finances as far back as 1997 to in= clude losses related to a number of complex partnerships it created.=20 . . .=20 DEAL AT-A-GLANCE=20 Company name: Dynegy.=20 Key players: Chuck Watson Dynegy's current chairman and CEO will remain c= hairman and CEO. Enron Corp.'s CEO and Chairman Ken Lay has been offered a = seat on Dynegy's board.=20 The trade: 0.2685 share of Dynegy for each share of Enron Corp.=20 Value of the deal: $8.85 billion in stock and $12.8 billion in Enron debt.= =20 Dynegy's close Friday: $38.76=20 Enron's close Friday: $8.63 a share.=20 Status of Enron Field name: Unknown. However Dynegy registered the name ww= w.dynegyfield.com on Thursday.=20 . . .=20 MORE STORIES=20 Enron Corp. paid $100 million to put its name on the Houston Astros' new do= wntown home. Now that the energy giant is being bought the name may soon b= e history.=20 The sale of Enron Corp. will likely punish Houston's downtown office market= emptying more office space at a time when several new buildings are going= up.=20 Never make predictions especially about the future Ken Lay once wrote i= n an essay concerning the world's energy needs. Enron's chief executive mig= ht be taking those words to heart today.=20 Dynegy's Chuck Watson has always maintained a low profile prompting some p= eople to label him as the most influential Houstonian you've never heard of= .=20 See these stories and more in Business.=20 . . .=20 The companies=20 Profiles of two Houston energy giants that announced their merger Friday:= =20 DYNEGY=20 Headquarters: Houston=20 Chairman and CEO: Chuck Watson=20 Revenues in 2000: $29.4 billion=20 Employees: 6000 worldwide=20 Electricity sales (2000): 137.7 million megawatt hours=20 Gas sales (2000): 10.9 billion cubic feet per day=20 Business segments: Dynegy Marketing and Trade Dynegy Midstream Services I= llinois Power Subsidiary Dynegy Global Communications=20 History: The company traces its roots to 1984 when the investment banking f= irm Morgan Stanley the law firm Akin Gump Strauss Hauer & Feld and six n= atural gas pipelines teamed up to create a natural gas marketing firm calle= d U.S. Natural Gas Clearinghouse Ltd. Chuck Watson joined the company in 19= 85 and the operation was revamped the pipeline partners bought out and th= e name shortened to Natural gas Clearinghouse. In 1995 the company purchas= ed Trident NGL Holdings quadrupling its liquids business. The company went= public for the first time under the new name NGC Corp. that same year. In = 1996 NGC merged with Chevron's gas and gas liquids business. The firm purc= hased its first power plants with the acquisition of Destec in 1997 and cha= nged its name to Dynegy in 1998 to reflect expansion beyond natural gas. Th= e company has continued to grow through acquisitions.=20 . . .=20 ENRON=20 Headquarters: Houston=20 Chairman and CEO: Ken Lay=20 Revenues in 2000: $100.8 billion=20 Employees: 20000 worldwide=20 Electricity sales (2000): 590.2 million megawatt hours=20 Gas sales (2000): 28.3 billion cubic feet per day=20 Core areas: Enron Wholesale Services Enron Energy Services Enron Transpor= tation Services=20 History: The company was formed in 1985 as a result of the merger of Housto= n Natural Gas and InterNorth a natural gas company based in Omaha Neb. Th= e deal integrated several pipeline systems to create the first nationwide n= atural gas pipeline system. In 1986 Ken Lay CEO of Houston Natural gas w= as named chairman and CEO and the name Enron was chosen. In 1989 Enron = began trading natural gas commodities through its GasBank a precursor to t= oday's wholesale trading business. Enron made its first electricity trade i= n 1994 and eventually became the world's biggest marketer of electricity an= d gas. Photo: 1. Ken Lay chairman and CEO of Enron Corp. listens at a Friday new= s conference as Chuck Watson chairman and CEO of Dynegy discusses his com= pany's acquisition of Enron (color) Graphs: 2. Deal At-A-Glance (b/w text= ) 3. More Stores (b/w text) 4. The companies (b/w p. 16 text)=20 Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 BUSINESS POWER PLAY / Lay opened energy firms to work in new markets MICHAEL DAVIS Staff 11/10/2001 Houston Chronicle 3 STAR 3 (Copyright 2001) THE famous baseball manager Casey Stengel was smart to advise Never make = predictions especially about the future Ken Lay once wrote in an essay o= n world energy needs.=20 Lay might be taking those words to heart today. As the chairman of Enron Corp. predicted not long ago We can see some ver= y significant growth with several years to come.=20 Once considered one of the shining stars of the energy business Lay has wa= tched the company he helped create melt down around him in a matter of week= s.=20 And as of Friday he was left to ponder an offer to serve as a member of th= e board for the new company formed from Enron and its chief rival - no long= er a chairman or a chief executive.=20 Perhaps that's the way he wants it.=20 When he turned over the chief executive's post at Enron to Jeffrey Skilling= earlier this year it seemed like the first move of his orderly exit from = the company he had helped create in the mid-1980s.=20 Eleven months later Skilling is gone and Lay has had to preside over the d= eath of Enron.=20 What had begun as a stodgy natural gas pipeline company had been molded and= expanded by the two men into a diversified financial giant with its hands = in countless markets from oil and natural gas to water and broadband.=20 It seemed Lay 58 who is an economist by profession had also cemented his= reputation as an elder statesman in the energy industry the man who had o= pened the business world's eyes to the array of possibilities that energy c= ompanies could explore for growth away from their traditional roles.=20 With the implosion of Enron in the past month Lay's legacy now seems tarni= shed. The man who was once referred to as an energetic messiah has been f= orced to sell off his creation in a fire sale to rival Dynegy in a hastily = arranged deal. Lay's approach is reflected in the design of the building En= ron is constructing across from its existing tower on Smith Street. Looking= down on the massive trading floor are two offices built for Lay and Skilli= ng.=20 The offices were considered symbolic of the company's openness and its phil= osophy of melding executives with the rank and file. Lay reportedly spurned= the express elevator to ride to his 50th-floor office to spend more time w= ith employees.=20 That sort of hands-on approach Lay brought to the company may be another ca= sualty analysts said.=20 I would be surprised if he had much of a role in running things from a day= -to-day perspective said Brian Youngberg energy analyst with Edward Jone= s in St. Louis. I think Dynegy will be running the ship and plug in some E= nron executives.=20 As the dust settles on Enron the question is being raised as to whether th= e company became too big for one or two men to run in a hands-on fashion.= =20 Ken Lay helped build Enron from being just a pipeline company but over ti= me the company got so big and complex that it was too hard for one or two s= enior executives to completely oversee things and to know fully what was go= ing on in the operating companies Youngberg said.=20 Raised on a farm in Missouri Lay is well-known not just as chairman of Enr= on but as a former undersecretary of the Interior Department and one of the= people who has helped shape Houston's destiny in the past 20 years. He is = considered instrumental in keeping Major League Baseball in Houston by supp= orting the construction of Enron Field.=20 But his lasting legacy will likely be as one of the key people who helped c= reate the huge natural gas futures market in the United States which was n= onexistent as recently as the late 1980s. He also will be remembered as the= man who led others to view the energy business as one integrated market an= d not individual fiefdoms.=20 Ken Lay really did educate his peers to understand the broadness of his bu= siness said Amy Jaffe a senior energy analyst with Rice University's Jam= es A. Baker III Institute for Public Policy. Whether his retirement is und= er positive or negative circumstances he has left a huge legacy on the ind= ustry.=20 Jaffe sees Lay as the person who got oil and gas executives to break out of= the old mentality and explore new technologies such as fuel cells and wind= power. He also was a leading proponent of natural gas and power deregulati= on.=20 He will leave Enron a wealthy man although much less so since the company'= s stock nose-dived. His current contract pays him a base salary of $1.4 mil= lion a year and a bonus of $7 million. It was due to expire in December 200= 3.=20 This is not the first time Lay has had to rescue Enron. In 1987 Enron was = rocked by the disclosure that rogue traders at its Enron Oil Co. had left t= he company holding the bag for about $1 billion in trading liabilities. Bef= ore disclosing it to the market the company worked the trading loss down t= o about $142 million.=20 We learned a lot certainly in a bad way Lay said of the incident in an = interview earlier this year. We put in place probably the best risk manage= ment and control system not just in our business but in any industry.=20 Some see irony in the fact that Dynegy CEO Chuck Watson will likely prevail= over Lay despite Lay's almost cult status among business leaders and busin= ess school professors.=20 Chuck Watson was underrated in his role in forming the natural gas market = in the United States. He was the man who realized the enormous potential of= the natural gas market Jaffe said. It's true that Enron came in with a = lot of advertising and built up a big position but maybe there is some poe= tic justice that the man who really started the natural gas clearinghouse c= ould wind back up as the dominant player in the industry.=20 ...=20 THE PLAYERS=20 1985-present: Enron Corp. various top management posts currently chairman= and CEO 1984-1985: Houston Natural Gas Corp. chairman and CEO 1981-1984 T= ransco Energy Co. president and chief operating officer Board memberships:= Compaq Computer Corp. Eli Lilly & Co. and Trust Company of the West Educa= tion: University of Missouri master's degree economics 1965: doctorate = economics Membership: Energy Advisory Board secretary National Petroleum = Council member Photo: Ken Lay=20 Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 BUSINESS POWER PLAY / Purchase elevates Watson's low profile GREG HASSELL Staff 11/10/2001 Houston Chronicle 2 STAR 3 (Copyright 2001) AS the chairman of a company that employs 6700 workers and rakes in annual= revenues of $29.4 billion Chuck Watson is hardly an anonymous executive i= n Houston.=20 But the head of Dynegy Inc. has always maintained a low profile prompting = some people to label him as the most influential Houstonian you've never he= ard of. He steers clear of the political arena and the limelight of the cit= y's big social soirees. He doesn't live in River Oaks but lives in the sam= e neighborhood near Champion's Forest where he's lived for years. When they donated $1 million worth of land for the relocation of his church= Windwood Presbyterian Watson and his wife Kim tried to donate anonymou= sly.=20 We talked about that a lot and they reluctantly agreed that it wouldn't t= ake a rocket scientist to figure out who in this congregation would be able= to do something like that Senior Pastor Kevin Rudolph said.=20 When fellow church member Merle Davidson recently offered to let Watson dri= ve a luxurious new Bentley for a weekend Watson readily agreed.=20 He enjoyed the car said Davidson general manager of Post Oak Motor Cars= . But when I asked him `Should I order you one?' he shook his head.=20 I don't know if I could drive such a high-profile car Watson said.=20 It's not that Watson objects to a fancy ride he drives a top-of- the-line = Mercedes. But he's not a showboat and isn't comfortable attracting attentio= n to himself.=20 He doesn't act like a big shot said Tilman Fertitta the chairman of Lan= dry's Restaurants who likes driving a Bentley and zipping around in a heli= copter. Chuck's not all caught up in the Houston hustle-and-bustle thing.= =20 Like it or not Watson is about to step out in a big way. If Dynegy complet= es the acquisition of Enron for $8.85 billion in stock Watson will become = captain of Houston's largest company. He will step right into the center of= the city's business stage taking from Enron Chairman Ken Lay the mantle o= f most powerful businessman in a city where commerce and the deal have alwa= ys come first.=20 Those who know Watson say he should have little trouble adapting to his hig= her profile and is ready for the many demands that will inexorably follow.= =20 Chuck is a guy who knows what he wants and goes and gets it Fertitta sai= d. He is not intimidated.=20 In fact when longtime friend Steve Patterson read about Enron's nose-dive = and the collapse of its stock he instinctively knew Watson would close in = on a deal.=20 I thought: `You know what Chuck will try to buy Enron. It just fits. It's= the big bold move that Chuck would try to make' said Patterson senior = vice president of the Houston Texans football team. Watson owns 15 percent = of the Texans the largest chunk outside of the piece owned by club founder= Bob McNair. Watson also owns the Houston Aeros hockey team.=20 Like Enron Chairman Ken Lay Watson was a pioneer in the deregulation of th= e energy business. He was one of the early innovative forces that shaped th= e world of trading electricity and swapping natural gas.=20 Watson was born 51 years ago on the Great Lakes naval base north of Chicago= . His father worked for the Navy which moved the young Watson clan around = early and often. Chuck Watson had attended more than 20 schools in nine sta= tes when he graduated from Oklahoma State University in 1972 with a degree = in economics.=20 After a 13-year career at Conoco Watson joined a fledgling company called = U.S. Natural Gas Clearinghouse in 1985. NGC was a consortium of gas pipelin= es that had the backing of a financial- services company and a local law fi= rm but conflicts among the partners hamstrung the little company.=20 Watson would not join the company until it was overhauled and most of the q= uarreling partners were bought out. Watson's vision was to buy the gas and = take title to it aggregate big volumes and leverage that to make bigger de= als and negotiate better rates from the pipelines that moved the gas around= .=20 In short the company moved beyond being a broker and became a wholesale st= ore for natural gas.=20 He is a visionary in the energy business said Bob McNair a longtime fri= end who founded Cogen Technologies and later sold the company to Enron for = $1.1 billion. Chuck will come across as this relaxed country person. Not = some sophisticate. But that is disarming. He is very creative and he is ve= ry smart.=20 While NGC initially concentrated on gathering moving and trading natural g= as the business has broadened along with the quickening pace of energy der= egulation. Now called Dynegy short for Dynamic Energy the company has evo= lved into an outfit that sells power directly to commercial and industrial = users of electricity and natural gas. It also has built a communications di= vision to capitalize on increasing demand for high-speed communication serv= ices.=20 Last year the company recorded an astounding 230 percent rise in net income= as well as a 91 percent jump in operating revenues. Dynegy's stock climbe= d 218 percent last year.=20 The success of Dynegy is a tremendous story Patterson said. It is amazi= ng the growth and the value he has been able to achieve.=20 According to some of those who've have done business with him Watson is no= t just bright he is extraordinarily tough.=20 He is a very aggressive person a tough negotiator. He bores in said Geo= rge Mitchell founder of Mitchell Energy and the man who carved The Woodlan= ds out of the piney forest.He is a very confident person. Unlike Ken Lay = who is a smoother type personality who works with people Watson is going t= o do it his way. They are both very good business people but they are very= different.=20 While willing to give power to his subordinates Watson is a hands- on CEO = who is unmistakably Dynegy's commanding force.=20 Chuck is very very intense . . . He burns said former Houston Mayor Bob= Lanier. In negotiations he gets down and learns all the details himself.= =20 How tough Watson is willing to be came to light in his contentious dealings= with Houston Rockets owner Les Alexander. Watson owned the master lease to= the Summit later renamed the Compaq Center which committed the Rockets t= o playing there through 2003. Eager to break the deal Alexander tried nego= tiating and litigating his way out of the lease all to no avail.=20 The battle deepened as the two men competed unsuccessfully to get a NHL hoc= key team in Houston and feuded over how a hockey team would share in the re= venues of a new stadium proposed for downtown.=20 Angered at the deal Alexander was able to get for the Rockets at the expen= se of a hockey franchise Watson spent about $100000 out of his own pocket= to help defeat the stadium referendum. It was his one overtly political ac= t here and some say it was the decisive blow to Alexander's aspirations.= =20 There are a lot of people I'd much rather have a contest with Lanier sai= d of Watson.=20 Alexander and Watson were later able to settle their differences and Watso= n supported the second arena referendum which passed. A basketball arena i= s now under construction downtown.=20 I'm not surprised to see Chuck Watson make an aggressive move like this = Alexander said Friday evening. He understands the industry as well as anyo= ne and therefore he's in the best position to assess the risk and take ad= vantage of the opportunity.=20 Like most opportunities the deal also represents a sizable risk. Taking ov= er Enron is a huge reach for Dynegy which will try to swallow a company th= at was five times bigger when measured by revenues.=20 Watson will need all of his shrewdness and ferocity to untangle the mess th= at is Enron and merge two operations that were each in their own way tryi= ng to reinvent the energy business.=20 I have some concerns for my friend McNair confessed. It is a tremendous= challenge. I know he'll handle it well but this will be a very demanding = business.=20 ...=20 The Players=20 1989-present: Dynegy chairman and CEO=20 1985: NGC Dynegy's predecessor president=20 1972-1985: Conoco various positions=20 Other: Board member Baker Hughes Vice Chairman Houston Texans=20 Education: Oklahoma State University business and economics=20 Membership: National Petroleum Council Interstate Natural Gas Association = of America board member Edison Electric Institute board member Natural Ga= s Council founding member Photo: Chuck Watson=20 Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 NEWS Dyenegy to acquire Enron in $8.9 billion stock deal / Many fear `unique' pr= oblems L.M. SIXEL Staff 11/10/2001 Houston Chronicle 3 STAR 1 (Copyright 2001) People who worked for Enron Corp. walked with a special swagger they knew = they were a part of something special something unique one employee said = Friday.=20 But today it seems as if that something special has evaporated. As rumors and news about the Dynegy buyout leaked out Friday many of those= who gathered around the base of the Enron Tower to smoke were worried abou= t their fate.=20 Several worried about their job prospects during a time when the economy ap= pears to be sinking into a recession and job losses are mounting across the= nation.=20 Others were concerned that Enron is such an innovator and their jobs so uni= que that they'll have a hard time finding an equivalent job somewhere else.= =20 Many were angry that company officials had made the financial missteps that= got the company into its precarious situation.=20 And others were just unnerved by the uncertainty.=20 See you Monday hopefully bro shouted one Enron employee to another acro= ss its tree-lined plaza.=20 Once the buyout was announced late Friday afternoon and it became clear lay= offs would be coming one employee seemed to feel a bit better.=20 It's a relief to know what's going on she said asking not to be identif= ied. And like many the employee who works on Enron's trading floor was no= t just thinking of her job. Like so many others her retirement account was= mostly invested in Enron stock.=20 The employee who asked not to be identified said she figured her retireme= nt account lost about $100000 in value over the past few weeks as Enron s= tock plummeted in value.=20 She even encouraged her college-age children to invest their college funds = in Enron stock. It's all gone now she said and that was money they'd need= in the next two years.=20 Jamie Lynn a 29-year-old coordinator of gas logistics figured that he los= t close to $400000 in stock options. But others employees lost millions h= e said.=20 It makes me sick to my stomach Lynn said.=20 While the money losses hurt he is also feeling badly because he loved his = job - and company - so much.=20 People walked around downtown with a swagger he said. They were proud t= o say they worked at Enron.=20 Lynn can't imagine finding another company with such an exciting culture an= d with such exciting challenges.=20 I don't want this company to be owned by someone else he said.=20 But if it had to be sold he was hoping Shell Oil Co. would be the buyer. S= hell isn't in any of the same lines of business as Enron and they'd have to= depend on Enron employees to keep the place running.=20 While Lynn is lucky because he is already being recruited by other companie= s other employees were not as upbeat about their opportunities. Several in= formation technology employees such as programmers and software designers w= ere especially worried.=20 The general market for information technology isn't very good right now and= they worried whether Dynegy would need their services.=20 Maybe I'll have to pack up and go back home said a software developer fr= om India who is working at Enron on a visa.=20 A programmer discussed her prospects while she waited for a bus. She's prep= aring for a layoff and luckily has been savingmoney to tide her over in ca= se she lost her job.=20 Other information technology professionals were more upbeat.=20 A systems integrator said he has no doubts that he'll be picked up by Dyneg= y because it needs to know how to run Enron's complicated computer systems.= Besides he said he has been recruited by Dynegy several times and said h= e was in a good position to cash in on connections.=20 Others were not as optimistic. Tears filled one employee's eyes as she wait= ed for a ride. Others were too upset to comment. Part of that stemmed from = the feeling that senior executives ran the company arrogantly and for their= own self-interests.=20 When the deal was announced employees began to turn their minds to more im= mediate details such as severance packages.=20 In the past Enron has been generous an employee said.=20 Let's hope that tradition continues she added.=20 . . .=20 DEAL AT-A-GLANCE=20 Company name: Dynegy.=20 Key players: Chuck Watson Dynegy's current chairman and CEO will remain c= hairman and CEO. Enron Corp.'s CEO and Chairman Ken Lay has been offered a = seat on Dynegy's board.=20 The trade: 0.2685 share of Dynegy for each share of Enron Corp.=20 Value of the deal: $8.85 billion in stock and $12.8 billion in Enron debt.= =20 Dynegy's close Friday: $38.76=20 Enron's close Friday: $8.63 a share.=20 Status of Enron Field name: Unknown. However Dynegy registered the name ww= w.dynegyfield.com on Thursday.=20 . . .=20 MORE STORIES=20 Enron Corp. paid $100 million to put its name on the Houston Astros' new do= wntown home. Now that the energy giant is being bought the name may soon b= e history.=20 The sale of Enron Corp. will likely punish Houston's downtown office market= emptying more office space at a time when several new buildings are going= up.=20 Never make predictions especially about the future Ken Lay once wrote i= n an essay concerning the world's energy needs. Enron's chief executive mig= ht be taking those words to heart today.=20 Dynegy's Chuck Watson has always maintained a low profile prompting some p= eople to label him as the most influential Houstonian you've never heard of= .=20 See these stories and more in Business.=20 . . .=20 The companies=20 Profiles of two Houston energy giants that announced their merger Friday:= =20 DYNEGY=20 Headquarters: Houston=20 Chairman and CEO: Chuck Watson=20 Revenues in 2000: $29.4 billion=20 Employees: 6000 worldwide=20 Electricity sales (2000): 137.7 million megawatt hours=20 Gas sales (2000): 10.9 billion cubic feet per day=20 Business segments: Dynegy Marketing and Trade Dynegy Midstream Services I= llinois Power Subsidiary Dynegy Global Communications=20 History: The company traces its roots to 1984 when the investment banking f= irm Morgan Stanley the law firm Akin Gump Strauss Hauer & Feld and six n= atural gas pipelines teamed up to create a natural gas marketing firm calle= d U.S. Natural Gas Clearinghouse Ltd. Chuck Watson joined the company in 19= 85 and the operation was revamped the pipeline partners bought out and th= e name shortened to Natural gas Clearinghouse. In 1995 the company purchas= ed Trident NGL Holdings quadrupling its liquids business. The company went= public for the first time under the new name NGC Corp. that same year. In = 1996 NGC merged with Chevron's gas and gas liquids business. The firm purc= hased its first power plants with the acquisition of Destec in 1997 and cha= nged its name to Dynegy in 1998 to reflect expansion beyond natural gas. Th= e company has continued to grow through acquisitions.=20 . . .=20 ENRON=20 Headquarters: Houston=20 Chairman and CEO: Ken Lay=20 Revenues in 2000: $100.8 billion=20 Employees: 20000 worldwide=20 Electricity sales (2000): 590.2 million megawatt hours=20 Gas sales (2000): 28.3 billion cubic feet per day=20 Core areas: Enron Wholesale Services Enron Energy Services Enron Transpor= tation Services=20 History: The company was formed in 1985 as a result of the merger of Housto= n Natural Gas and InterNorth a natural gas company based in Omaha Neb. Th= e deal integrated several pipeline systems to create the first nationwide n= atural gas pipeline system. In 1986 Ken Lay CEO of Houston Natural gas w= as named chairman and CEO and the name Enron was chosen. In 1989 Enron = began trading natural gas commodities through its GasBank a precursor to t= oday's wholesale trading business. Enron made its first electricity trade i= n 1994 and eventually became the world's biggest marketer of electricity an= d gas. Photo: Photo: 1. Ken Lay chairman and CEO of Enron Corp. listens at a Fri= day news conference as Chuck Watson chairman and CEO of Dynegy discusses = his company's acquisition of Enron (color) Graphs: 2. Deal At-A-Glance (b/= w text) 3. More Stores (b/w text) 4. The companies (b/w p. 16 text)= =20 Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 Financial Desk The Nation Smaller Rival to Acquire Teetering Enron Power: Energy giant tha= t pressed for deregulation in California is on the brink of collapse. NANCY RIVERA BROOKS THOMAS S. MULLIGAN NANCY VOGEL TIMES STAFF WRITERS 11/10/2001 Los Angeles Times Home Edition A-1 Copyright 2001 / The Times Mirror Company Enron Corp. the once-highflying energy giant whose aggressive efforts to p= rofit from California's energy deregulation made it a target of consumer an= d political backlash on Friday agreed to be saved from possible financial = collapse through a proposed acquisition by rival Dynegy Inc.=20 The roughly $7.7-billion deal is a stunning plot twist for Houston-based En= ron which was vilified in California as it was being glorified on Wall Str= eet. In only the last month a series of disturbing financial revelations p= ushed to the edge of ruin this once-powerful company whose top executives = had lectured California on its energy foibles and who influenced the direct= ion of national energy policy. Enron muscled its way to the top of the energy heap using aggressive and i= n the end financially suspect strategies that proved its undoing.=20 Now the company that late last year had a market value of $63 billion is w= orth one-tenth that and has agreed to be swallowed by a cross-town competit= or one-quarter its size. Enron's proud and influential chairman and chief e= xecutive Kenneth L. Lay who became a focus of bitter attacks by Californi= a politicians and regulators would lose his job as would many others at E= nron.=20 Even the name would disappear. The combined company would be called Dynegy = Inc. if the deal receives all the necessary regulatory and shareholder appr= ovals.=20 California officials took no joy in Enron's fate Friday though there was p= erhaps some sense of retribution from its many critics in the state.=20 This is basically a rogue corporation said Sen. Steve Peace (D-El Cajon)= an outspoken critic of Enron for years who dealt with the company as he c= haired the committee that hammered out the legislative portion of Californi= a's landmark electricity deregulation plan in 1996. It has from the beginn= ing been a rogue corporation which answered in its mind to a higher law--a = fundamental belief that there are laws of economics that supersede the law = of the land.=20 A Failed Experiment=20 Steve Maviglio spokesman for Gov. Gray Davis said that although Enron was= never a major force in California's doomed electricity market it was outs= poken in support of deregulation.=20 In a sense their experiment was much like California's experiment--a fail= ure he said.=20 Said Harvey Rosenfield president of the Foundation for Taxpayer and Consum= er Rights in Santa Monica: Nothing could better illustrate the disaster of= deregulation than the fact that one of its biggest proponents which reape= d the reward of deregulation is suffering the consequences.=20 Enron is the world's largest energy trader handling one of four energy dea= ls in the United States through its online trading operation EnronOnline. = Since it reported a surprising third-quarter loss on Oct. 16 partly tied t= o shadowy investment vehicles Enron has endured a huge loss of investor co= nfidence which brought on a massive cash crunch and some shrinkage of its = trading business.=20 Under the deal announced Friday Dynegy invited in two weeks ago after Enr= on fell short in its efforts to line up new financing would immediately he= lp Enron by pouring $1.5 billion in cash into the company. The money would = be provided by ChevronTexaco Corp. the San Francisco oil company that owns= nearly 27% of Dynegy.=20 Enron shareholders would get 0.2685 Dynegy share for each Enron share whic= h values the company at about $7.7 billion based on Friday's stock close. D= ynegy shares surged $2.26 to close at $38.76 per share on the New York Stoc= k Exchange Enron added 22 cents to close at $8.63 per share still off 89%= year to date.=20 If the deal closes in six to nine months as the parties expect Dynegy and= ChevronTexaco would invest $1 billion additionally in the combined company= .=20 This is just a financial bonanza really for both companies said Charles = L. Watson Dynegy chairman and chief executive who will head the combined = company. Watson said the merger would immediately add to Dynegy's earnings.= =20 Even so the repercussions of Enron's fall from grace could be far-reaching= . Coming on the heels of California's energy crisis Enron's troubles may s= low the country's march toward energy deregulation which Lay and Enron cha= mpioned for years as a potential boon to consumers and the economy in gener= al.=20 But the deal announced Friday will prevent an even worse outcome energy ex= perts said: the threatened collapse of Enron which would clog up for a tim= e the business of buying and selling electricity natural gas and oil. That= could interfere with delivery of energy around the country they said.=20 This is an encouraging development for the energy industry said Stephen = Baum chairman of Sempra Energy the San Diego-based parent of Southern Cal= ifornia Gas and San Diego Gas & Electric. The Enron-Dynegy combination wil= l create a credit-worthy counter-party which will help preserve order in th= e marketplace. It also will reinforce confidence in the energy trading busi= ness going forward.=20 But some in the industry are less pleased.=20 Raymond Plank chairman of Apache Corp. a Houston-based natural gas explor= ation and development firm said he is considering a motion to the Federal = Trade Commission against the proposed merger.=20 There are issues of concentration in a combination of the largest energy t= rader Enron and the fifth-largest Dynegy Plank said. California shoul= d be particularly concerned because Dynegy owns power plants there and Enro= n has pipelines and other interests.=20 Troubles Mount as Stock Plunges=20 The swagger that was Enron is long gone. Consider:=20 * Enron's brash chief executive Jeffrey K. Skilling touted only months ag= o as one of the young stars of American business abruptly resigned in Augu= st citing personal reasons. Enron's stock already had fallen from its high= of nearly $90 per share as investments in water and telecommunications tur= ned sour a fact that contributed to Skilling's departure.=20 * The Securities and Exchange Commission has launched an investigation of E= nron's controversial dealings with a number of limited partnerships some o= rganized and run by Enron managers including Enron Chief Financial Officer= Andrew S. Fastow who was ousted last month.=20 * In an extraordinary confession Thursday Enron announced that it had over= stated profit by $586 million or 20% during the last five years. The earl= ier financial statements reported to Wall Street and the investing public = Enron said should not be relied upon.=20 * The company also fired its treasurer and a corporate lawyer both of whom= it said were investors in one of the limited partnerships. Yet some analys= ts questioned whether even in its admission of accounting trickery Enron = wasn't still holding something back.=20 * Credit-rating agencies which already have downgraded Enron's bonds to ba= rely above junk status continue to pore over Enron's books. Analysts hav= e said a further downgrade to the level of junk or below investment grade= could precipitate a crisis akin to a run on a bank and threaten Enron's su= rvival while the merger is pending.=20 With its stock crumbling and trading partners leery about its ability to pa= y its debts Enron was forced to walk hat in hand down Houston's Energy All= ey to negotiate a saving takeover by Dynegy the rival once jokingly dismis= sed as Enron Lite.=20 In the trading markets where Enron still holds a leading but increasingly v= ulnerable position other players already are stepping up to grab a bigger = share of the business. Even if Enron's trading operation survives more or l= ess intact under the wing of a Dynegy or some other company experts said = it may never regain its former level of dominance.=20 Enron has been a very innovative shop willing to spend considerably to es= tablish new markets said analyst Andre Meade of Commerzbank Securities in= New York. If that culture is not kept everyone loses.=20 Skilling and mentor Lay had worked for a decade to create both a new kind o= f company and a new set of markets for it to play.=20 In large part they succeeded. Enron transformed itself from a traditional = gas pipeline company into a high-tech global trader of everything from elec= tricity to pollution credits to aluminum. The company's overarching strateg= y was to pare its physical assets to the minimum to get the maximum profit = bang from its intellectual capital: the ranks of MBAs and PhDs that filled = its Houston trading floor.=20 Rather than maintain its own expensive gas fields and power plants--which i= t relegated to stodgy utilities and oil companies--Enron would handle every= thing by contract relying on a network of suppliers to obtain store and d= eliver the goods while the company focused on squeezing out the best price.= =20 Dynegy in contrast has invested in such energy assets including three po= wer plants in Southern California. It uses those assets to back its trading= operation which is much smaller than Enron's.=20 Enron pulled off a migration from the dirty extreme of the oil patch the= asset-intensive domain of drillers and explorers to the clean end wher= e all the deals are done on a computer screen. It also was a migration from= lower profit margins and lower risk to high margins and high risk.=20 Shannon B. Burchett chief executive of Risk Limited Corp. an energy-orien= ted strategic-management consultancy in Dallas compared Enron to the inves= tment bank Salomon Bros. where he used to work in the former PhiBro commod= ities unit.=20 Enron Burchett said embodies a Wall Street culture that happens to be in= Houston.=20 Wall Street certainly got it or thought it did.=20 Accounting Rules Pushed to the Limit=20 At Enron's zenith last year when its stock peaked near $90 a share and it = was pushing into esoteric markets for weather derivatives and fiber-optic b= andwidth Enron seemed to be a one-company wave of the future.=20 Enron's aggressiveness brainpower and willingness to back radical new idea= s with serious capital helped it acquire an aura that in some ways was its = undoing analysts said.=20 Investors accorded Enron's stock a price-to-earnings valuation that was con= sistently higher than those of its peers reflecting the view that its cutt= ing-edge business model could consistently deliver faster-growing profit th= an its competitors.=20 To keep profits arcing ever upward to justify the outsize valuation Enron = began pushing the accounting rules as hard as it pushed competitors in the = trading arena. It acknowledged as much in its statement Thursday conceding= that the operations of three of the limited partnerships should have been = consolidated with Enron's own financial statements instead of being held se= parate.=20 By raising capital and running deals through the limited partnerships Enro= n could keep large amounts of debt and certain volatile assets off its own = balance sheet while simultaneously booking profit from the partnerships' t= ransactions analyst Meade said.=20 Deals Backed by Costly Guarantees=20 One risky aspect of some of Enron's deals through the partnerships was what= Meade called a double-trigger guarantee under which Enron would pledge = a cash payout if either its bond rating fell below investment grade or its = stock declined below a certain price.=20 The guarantees must have seemed a cheap way to sweeten a deal when Enron's = stock was flying high but they came back to haunt the company later when = it had to pay cash to make good on its obligations Meade said.=20 Other energy-trading companies use similar devices but Enron carried it to= an extreme and disclosed too little detail to make the process understanda= ble to investors he said.=20 Enron's magic like that of the Internet-stock phenomenon had never been e= asy to understand in the first place. The company had a reputation among an= alysts for providing scanty financial detail and hard-to-grasp explanations= of some of its dealings.=20 But as long as the reported profit kept climbing Enron kept getting the be= nefit of the doubt.=20 M. Carol Coale a respected Houston-based analyst for Prudential Securities= ruefully recalled a time last winter when she told Enron she could find = no positive catalyst for the stock and was considering downgrading her inv= estment opinion.=20 Skilling telephoned Coale and asked her to hold off promising her that the= re was unspecified good news on the horizon that would justify her faith.= =20 I believed him Coale said last week in an interview in Houston. She held= her rating steady at that time but has since downgraded Enron to an outrig= ht sell.=20 Instead of Skilling's promised good news questions mounted during the spri= ng and Enron's stock continued a steady decline. Coale and other analysts = were troubled that a large proportion of Enron's earnings seemed to come no= t from its core trading operations but from unusual transactions involving = the company's own stock or that of affiliates.=20 In California Enron played a key role as chief cheerleader for electricity= deregulation and a key energy middleman in the state. As wholesale electri= city prices soared and the state plunged into its energy crisis late last y= ear Enron and other out-of-state electricity generators and traders became= favorite targets of California politicians and regulators who said the co= mpanies were manipulating the market and charging too much for power.=20 But significantly California was not a directly successful territory for E= nron.=20 Markets in water did not develop as Enron subsidiary Azurix envisioned. And= Enron's plans for selling electricity to retail customers were deferred ev= en as deregulation took effect in 1998 because the state's deregulation for= mulas didn't allow room for retail competition.=20 Lay complained about California frequently and met with the governor to try= to influence the state's moves to repair its energy problems. In an interv= iew in his Houston office in January--overlooking Enron's new headquarters = building which is still under construction as the company's name disappear= s--Lay said he and other Enron executives had objected to the way Californi= a regulation was set up.=20 We objected more vehemently than anyone. We opposed the concept of the poo= l he said referring to the now-defunct California Power Exchange in whi= ch most of the state's power was bought and sold in an hourly market. What= competitive market in the world has a pool? We don't buy our groceries thr= ough a centralized PX.=20 Enron also backed away from building a small power plant in California last= year when the state imposed price caps.=20 One of the loudest complaints by Davis and other California officials was t= hat generators of electricity were playing games to get higher prices.=20 They criticized Enron severely too even though it was not a major generat= or because the level of its worldwide trading operations--buying and selli= ng contracts worth billions of dollars in electric power every day--gave En= ron immense sway over pricing and supplies of electricity. They also believ= e that Enron and Lay helped play a part in the reluctance of federal regula= tors for several months to place restraints on the California marketplace.= =20 CEO's Future Role Uncertain=20 Millions of people in California businesses lost money because this rogue = company succeeded in controlling the government of the United States said= state Sen. Peace one of the architects of the state's deregulation plan.= =20 Ken Lay was a mystic Peace said. Whatever he said had to make sense bec= ause he was Ken Lay. It was hero worship.=20 Many of the people working as economists at the Federal Energy Regulatory = Commission worshiped Ken Lay. As a consequence the things Enron promoted a= nd pushed for were never challenged intellectually and otherwise.=20 Lay who has been asked to sit on the board of the combined company said F= riday that he had not yet decided whether to accept.=20 He described his time building Enron as a very long ride. It's been a very= good ride for the most part.=20 I have to say the last few weeks have not been very much fun he said.=20 *=20 Rivera Brooks reported from Los Angeles and Mulligan from Houston and New Y= ork. Times staff writer James Flanigan in Los Angeles contributed to this r= eport.=20 *=20 RELATED STORY=20 Fallen CEO: Enron's Lay is a brilliant man defeated by arrogance associate= s say. A22=20 RELATED STORY=20 Energy crisis: Power firms have seen their fortunes dim in recent months. S= unday Business C1 PHOTO: Dynegy Chairman and Chief Executive Charles L. Watson right announ= ces the merger with Enron Chairman Kenneth L. Lay. PHOTOGRAPHER: Associ= ated Press PHOTO: This is just a financial bonanza really for both compan= ies says Charles L. Watson Dynegy chairman and chief executive. PHOTO= GRAPHER: Associated Press=20 Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 NEWS Dynegy to acquire Enron in $8.9 billion stock deal / New giant moves out of= shadow LAURA GOLDBERG Staff 11/10/2001 Houston Chronicle 2 STAR 1 (Copyright 2001) Enron Corp. a mainstay of Houston's corporate landscape that helped turn t= he city into a global energy trading powerhouse will disappear in a turn o= f events that would have been unthinkable a month ago.=20 In a deal that will unite two hometown rivals Dynegy announced Friday even= ing it would buy the beaten-down Enron in a stock deal worth almost $8.9 bi= llion plus the assumption of $12.8 billion in debt. The purchase will end Enron's reign as the world's largest energy trader c= atapulting a company to the top that in many ways has been in Enron's shado= w.=20 This could be viewed as Dynegy being the savior of industry in rescuing En= ron the largest energy trader and restoring market liquidity said Carol= Coale a stock analyst with Prudential Securities in Houston who follows = both companies.=20 A much bigger Dynegy - with annual revenues exceeding $200 billion and $90 = billion in assets - will emerge with Chuck Watson its current chairman and= chief executive keeping those roles in the combined company.=20 Layoffs are expected but executives said it was too early to say how many.= Dynegy has almost 1600 employees in Houston Enron has more than 7000 he= re.=20 For Watson the deal is all about growth.=20 It accelerates our strategy some three or four years he said shortly aft= er the deal was announced. This is just a financial bonanza really for bot= h companies.=20 This isn't the way Ken Lay Enron's chairman and chief executive ever thou= ght his years of work would turn out.=20 This would not have been my dream case Lay said in an interview with the= Chronicle shortly after the deal was announced. I would not even have con= templated it three or four weeks ago.=20 Lay has been offered a seat on the combined company's board but hasn't dec= ided yet whether to take it. He won't have any management role once the dea= l closes.=20 He helped take Enron from a staid pipeline company created from a 1985 merg= er to a trading machine that wheels and deals in electricity gas electrici= ty financial contracts used to help companies manage risk and other commod= ities.=20 But Lay said he believed selling Enron was the best option for its sharehol= ders employees and the city considering the company's current battered sta= te.=20 This is the best way to provide certainty to protect this wholesale market= ing and trading franchise which is so valuable he said adding that Enron= looked at two or three other alternatives as it tried to strengthen its ba= lance sheet and add cash to into its operations.=20 Lay said it's not his preference to sell Enron and see its name disappear.= =20 It happens to be the best alternative said Lay. I'm a realist. I knew w= hat needed to be done.=20 Among Enron's troubles: The Securities and Exchange Commission is investiga= ting business deals Enron did with two investment partnerships run by its f= ormer chief financial officer its credibility on Wall Street is close to z= ero a pile of shareholder lawsuits and its credit rating which it relies = on to successfully run its core trading business has been lowered.=20 While other questions had hung over Enron earlier this year the path to it= s end really began Oct. 16 when the company released third- quarter earnin= gs and reported significant financial losses related to the two investment = partnerships.=20 That set in a motion a spiral of events leading to Friday's announcement.= =20 Watson called Lay on Oct. 24 to see if he could do anything to help dispel = rumors that Dynegy had stopped trading with Enron.=20 That conversation led to a meeting at Lay's house days later at which the = two started talking about a deal.=20 As these things go the deal came together quickly especially with so many= question marks hanging over Enron.=20 I think it's important to understand that Ken and I have known each other = for some 20 years Watson said. We have a good understanding of what they= do and how they do it. We knew that their franchise was solid.=20 The recent talks Watson said focused on really understanding Enron's core= business and how it could merge with Dynegy.=20 Added Lay: Good deals come together fast. Bad deals take a little longer.= =20 Under the terms of the deal which is expected to close in six to nine mont= hs:=20 Enron shareholder's get 0.2685 share of Dynegy per Enron share.=20 Dynegy will immediately inject $1.5 billion in Enron to help shore it up. D= ynegy will get that money from ChevronTexaco which owns about 26 percent o= f Dynegy.=20 In return for that money Dynegy will get preferred stock and other rights = in Enron's Northern Natural Gas pipeline system. Should the deal not close= Dynegy has the right to buy all of Northern Natural Gas.=20 At the deal's closing ChevronTexaco will provide another $1 billion to the= combined company.=20 Also at the closing Dynegy's current shareholders will own about 64 percen= t of the combined company with Enron's current shareholder's owning about = 36 percent.=20 Enron will have the right to designate at least three board members for the= combined company which will have 14 board seats.=20 Steve Bergstrom Dynegy's president and Rob Doty Dynegy's chief financial= officer will keep those roles in the new company. Greg Whalley currently= president and chief operating officer of Enron will became an executive v= ice president at the combined company.=20 The deal contains $350 million breakup free that Dynegy would get it anothe= r suitor came in and Enron decided to take a better offer.=20 Watson also said the deal contains escape clauses to protect Dynegy should = it be necessary but he doesn't expect any surprises.=20 We looked under the hood and guess what it's just as strong as we thought= it was he said.=20 Dynegy will talk to analysts and investors on a conference call Monday att= empting to convince them of the deal's value.=20 On paper it looks good said Coale the analyst. We still remain concer= ned about the uncertainties that shroud Enron . . . The risks continue to b= e what we don't know about Enron. We just hope Chuck and his team do all th= e necessary due diligence which is going to take more than a couple weeks.= =20 There are also concerns about merging two different cultures.=20 Looking at cultures the two companies are very different she said. Dyn= egy is a little bit of a fraternity. Chuck started this company and I'm sur= e he has a heartfelt emotion toward making things work at Dynegy. Enron is = a mercenary aggressive cutthroat culture.=20 At the start of the year Enron was still heralded as an innovator for othe= rs to emulate. Since a series of problems began chipping away at Enron's i= mage.=20 But such concerns were mostly pushed aside for as long as the company's sto= ck price performed well and its core energy trading business turned out hig= her and still-higher profits.=20 The company's woes became more serious and quickly multiplied after it made= troubling financial disclosures in its third-quarter earnings report Oct. = 16.=20 It disclosed that day it had taken a $35 million loss and reduced sharehold= ers equity by $1.2 billion related to ending business dealings with two inv= estment partnerships formerly run by Andrew Fastow its chief financial off= icer.=20 The disclosures heightened Wall Street's ongoing concerns that Enron's fina= ncial reporting was too difficult to understand and skimped on details. It = also led to fears that Enron would be on the hook for billions of dollars r= elated to other financial vehicles.=20 Days later Enron revealed that the SEC was investigating transactions betw= een Enron and the partnerships called LJM Cayman and LJM2 Co-investment. I= t also replaced Fastow and has been hit with a growing number of shareholde= r lawsuits.=20 Then the company's credit rating was downgraded which raised questions ab= out its ability to manage its core energy trading business.=20 As Wall Street's questions grew Enron retreated into silence leaving anal= ysts and investors to speculate on worst-case scenarios which fed fears th= at company was facing a cash-crunch and caused investors to keep dumping th= e stock.=20 That in turn led some of Enron's trading partners to shift business elsewh= ere and raise their credit requirements to do business with Enron which in= turn raised even more fears about a cash- crunch and the company's short-= term stability.=20 Thursday Enron said it is restating its finances as far back as 1997 to in= clude losses related to a number of complex partnerships it created.=20 . . .=20 DEAL AT-A-GLANCE=20 Company name: Dynegy.=20 Key players: Chuck Watson Dynegy's current chairman and CEO will remain c= hairman and CEO. Enron Corp.'s CEO and Chairman Ken Lay has been offered a = seat on Dynegy's board.=20 The trade: 0.2685 share of Dynegy for each share of Enron Corp.=20 Value of the deal: $8.85 billion in stock and $12.8 billion in Enron debt.= =20 Dynegy's close Friday: $38.76=20 Enron's close Friday: $8.63 a share.=20 Status of Enron Field name: Unknown. However Dynegy registered the name ww= w.dynegyfield.com on Thursday.=20 . . .=20 MORE STORIES=20 Enron Corp. paid $100 million to put its name on the Houston Astros' new do= wntown home. Now that the energy giant is being bought the name may soon b= e history.=20 The sale of Enron Corp. will likely punish Houston's downtown office market= emptying more office space at a time when several new buildings are going= up.=20 Never make predictions especially about the future Ken Lay once wrote i= n an essay concerning the world's energy needs. Enron's chief executive mig= ht be taking those words to heart today.=20 Dynegy's Chuck Watson has always maintained a low profile prompting some p= eople to label him as the most influential Houstonian you've never heard of= .=20 See these stories and more in Business.=20 . . .=20 The companies=20 Profiles of two Houston energy giants that announced their merger Friday:= =20 DYNEGY Headquarters: Houston=20 Chairman and CEO: Chuck Watson=20 Revenues in 2000: $29.4 billion=20 Employees: 6000 worldwide=20 Electricity sales (2000): 137.7 million megawatt hours=20 Gas sales (2000): 10.9 billion cubic feet per day=20 Business segments: Dynegy Marketing and Trade Dynegy Midstream Services I= llinois Power Subsidiary Dynegy Global Communications=20 History: The company traces its roots to 1984 when the investment banking f= irm Morgan Stanley the law firm Akin Gump Strauss Hauer & Feld and six n= atural gas pipelines teamed up to create a natural gas marketing firm calle= d U.S. Natural Gas Clearinghouse Ltd. Chuck Watson joined the company in 19= 85 and the operation was revamped the pipeline partners bought out and th= e name shortened to Natural gas Clearinghouse. In 1995 the company purchas= ed Trident NGL Holdings quadrupling its liquids business. The company went= public for the first time under the new name NGC Corp. that same year. In = 1996 NGC merged with Chevron's gas and gas liquids business. The firm purc= hased its first power plants with the acquisition of Destec in 1997 and cha= nged its name to Dynegy in 1998 to reflect expansion beyond natural gas. Th= e company has continued to grow through acquisitions.=20 . . .=20 ENRON Headquarters: Houston=20 Chairman and CEO: Ken Lay=20 Revenues in 2000: $100.8 billion=20 Employees: 20000 worldwide=20 Electricity sales (2000): 590.2 million megawatt hours=20 Gas sales (2000): 28.3 billion cubic feet per day=20 Core areas: Enron Wholesale Services Enron Energy Services Enron Transpor= tation Services=20 History: The company was formed in 1985 as a result of the merger of Housto= n Natural Gas and InterNorth a natural gas company based in Omaha Neb. Th= e deal integrated several pipeline systems to create the first nationwide n= atural gas pipeline system. In 1986 Ken Lay CEO of Houston Natural gas w= as named chairman and CEO and the name Enron was chosen. In 1989 Enron = began trading natural gas commodities through its GasBank a precursor to t= oday's wholesale trading business. Enron made its first electricity trade i= n 1994 and eventually became the world's biggest marketer of electricity an= d gas. Photo: 1. Ken Lay chairman and CEO of Enron Corp. listens glumly at a Fri= day news conference as Chuck Watson chairman and CEO of Dynegy discusses = his company's acquisition of Enron (color) 2. DEAL AT-A- GLANCE (text) 3.= MORE STORIES (text) 4. The companies (b/w p. 16 text)=20 Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 Financial Enron Accepts $8 Billion Buyout Offer From Dynegy Energy Giant Was Forced = to Negotiating Table After Disclosing That It Had Overstated Earnings Peter Behr Washington Post Staff Writer 11/10/2001 The Washington Post FINAL E01 Copyright 2001 The Washington Post Co. All Rights Reserved Embattled Enron Corp. yesterday accepted a buyout offer valued at about $8 = billion from crosstown rival Dynegy Inc. If the deal is completed it would= end Houston-based Enron's reign as the leader in the huge energy trading m= arkets that set the prices of power and natural gas in the nation.=20 Its cash dwindling and its credit rating hammered Enron was forced to the = negotiating table after its recent disclosures that its obligations to a co= mplex web of partnerships involving company officials had caused the tradin= g powerhouse to overstate its earnings and obscure its total debt obligatio= ns. Four top Enron officials have resigned or been replaced since July and= once Dynegy takes control Enron's chairman and chief executive Kenneth L= ay will also leave the company. Lay said yesterday that he had not decided= whether to accept Dynegy's offer to serve on the combined company's board. It's been a good ride for a long time Lay said in a conference call last= night. The last three weeks haven't been a whole lot of fun.=20 The final deal was announced after the close of stock trading. Enron's shar= es -- which had fallen from $33 to $8 after the disclosures -- ended the da= y slightly higher at $8.63. Dynegy's stock closed at $38.76 up $2.26.=20 Dynegy offered all stock for the Enron shares so the total value of the de= al will fluctuate with Dynegy's stock price. Dynegy also said it would assu= me about $13 billion in Enron debt bringing the total value of the transac= tion to around $21 billion.=20 Dynegy's rescue of Enron will begin with an immediate cash infusion of $1.5= billion which will be supplied by ChevronTexaco Corp. a major Dynegy sto= ckholder. ChevronTexaco will invest another $1 billion in Dynegy after the = acquisition has passed regulatory review and is completed which executives= said they expect will take six to nine months as Enron tries to unscramble= the complex partnerships that are now under investigation by the Securitie= s and Exchange Commission.=20 The takeover agreement gives Dynegy an escape clause permitting it to cance= l the purchase if Enron winds up with heavy regulatory fines or legal judgm= ents from shareholder suits tied to its handling of the partnerships.=20 Chuck Watson Dynegy's chairman and chief executive said in the conference= call that a close scrutiny over the past two weeks of Enron's financial co= ndition convinced him that the company's trading and pipeline businesses we= re solid. We looked under the hood and guess what? It looked just as stro= ng as we thought it was. Watson said he did not think more damaging disclo= sures were forthcoming from Enron.=20 Until the partnership mess Enron was the nation's dominant energy trader = and it had front-door political connections to the White House. Lay its lo= ngtime chairman raised more then $100000 for the presidential election ca= mpaign of his friend George W. Bush. Enron rode the growth of energy tradin= g markets beginning in the mid-1990s as first natural gas and then electr= ic power sales were deregulated at the wholesale level. Its revenues leaped= from $9.2 billion in 1995 to $100.8 billion last year.=20 During those heady times the Houston company could choose which questions = to answer about its dealings with related partnerships and its Byzantine bo= okkeeping.=20 It was always very difficult to get information said Louis B. Gagliardi= an analyst with John S. Herold Inc. They would always rebuff you.=20 Until this fall the muscular company seemed too big to stumble said inves= tment manager David Coxe with Harris Insight Equity Fund in Chicago.=20 Coxe bought 78000 shares of Enron at $40 a share in August after wrestlin= g with the decision for months he said. Then Jeffrey Skilling Enron's chi= ef executive and strategic mastermind unexpectedly resigned. The stock wh= ich had been as high as $90 in August 2000 pitched downward.=20 Enron seemed so indispensable to the nation's energy markets that I though= t it inconceivable it could implode Coxe said. That's how I got sucked i= n.=20 Enron's fall is classic hubris Coxe said: a Greek tragedy striking someo= ne who chose to defy the gods -- in this case the rules of the system.= =20 Among the rules that Enron now acknowledges it didn't follow were the accou= nting standards that applied to the complex partnerships it created. The pu= rpose of the partnerships Enron said was to reduce the risks of investmen= ts in Internet transmission systems and to sell power plants and other asse= ts it no longer wanted.=20 The accounting errors were described in a 20-page SEC filing Enron made Thu= rsday. The errors resulted in a $1.2 billion reduction in the value of shar= eholders' equity. The company also said it had overstated its earnings by $= 586 million since 1997.=20 Enron created partnerships that would buy major assets -- such as a power p= lant -- that Enron wanted to sell or in other cases assets such as fiber-= optic cable networks that Enron intended to run but did not want to have on= its balance sheet.=20 The partnerships had outside investors but the general partner of two of t= hem was Enron's own chief financial officer Andrew Fastow. He earned $30 m= illion in fees from managing two of the largest partnerships according to = the SEC document.=20 Enron added to the capital of these partnerships by pledging its stock or = securities convertible into stock. Some of those stock transactions should = have been counted as loans resulting in the $1.2 billion drop in sharehold= er equity Enron now says.=20 Investors are asking why Enron's auditor Arthur Andersen LLP did not insi= st that these transactions be handled that way in the first place. Enron's = SEC filing mentions but does not explain some proposed audit adjustments = over the past four years that were overruled.=20 Even though as Enron now acknowledges it created an information barrier = masking critical information and violating standard accounting rules many = financial analysts who were recommending the stock to investors were not pu= shing hard enough to punch through that barrier some analysts acknowledge.= =20 It was so complicated that everybody was afraid to raise their hands and s= ay 'I don't understand it' Gagliardi said.=20 The questions are now coming from a new committee reporting to Enron's boa= rd that will investigate how the company's financial reporting was handled= from the SEC and eventually from teams of lawyers representing aggrieve= d shareholders.=20 Lay indicated yesterday he had not been aware until recently that Enron emp= loyees other than Fastow had profited from the partnership activity. Enron = directors had approved Fastow's management of the partnerships but Fastow = quit the partnerships in July and was then replaced as chief financial offi= cer.=20 Enron this week fired Treasurer Ben Glisan and Kristina Mourdant an Enron = division lawyer who it said had invested in partnerships that were tied to= one of the major partnerships headed by Fastow. The Enron report to the SE= C describes a central role in these transactions played by Michael J. Koppe= r an associate of Fastow who left Enron in July to take over Fastow's fina= ncial interests in the partnership the company said.=20 Enron will hold a conference call next week to discuss what it has uncovere= d about outside partnership investments. Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 Financial Desk The Nation NEWS ANALYSIS A Visionary Fallen From Grace JAMES FLANIGAN TIMES STAFF WRITER 11/10/2001 Los Angeles Times Home Edition A-22 Copyright 2001 / The Times Mirror Company A year ago Enron Corp. Chairman Kenneth L. Lay was on top of the energy wo= rld. As a leading fund-raiser contributor and energy advisor to the Bush a= dministration he played a key role in shaping the new president's energy p= olicy. As head of the world's largest energy trading company he had an eno= rmous influence on the price of energy in California and across the nation.= Enron's highflying stock helped him cash out $123 million in stock options= last year alone.=20 On Friday with Enron being saved from financial collapse by agreeing to be= acquired by rival Dynegy Inc. Lay's career and reputation are in shambles= . Under the merger he will be stripped of a management job. His integrity = is tattered with Enron's controversial financial dealings under federal in= vestigation. Enron investors and employees are chagrined and outraged becau= se the company's stock lost 80% of its value in recent weeks. The rapid rise and fall of Lay 58 is a story of how a brilliant man with = innovative ideas and a grand scheme to transform the world's energy markets= was overcome with arrogance associates and critics say. Under Lay Enron = stretched the limits of the law and took risks that nearly caused its finan= cial collapse they say. That in turn could have resulted in a widespread d= isruption in energy supplies.=20 Enron's behavior casts doubt on the integrity of our financial markets. It= is a very serious matter said Edward R. Muller an energy investor and f= ormer president of Edison International's Mission Energy subsidiary.=20 Nobody denies he's smart but it's a question of integrity said Raymond = Plank chief executive of Apache Corp. and an associate of Lay's in Houston= 's vibrant oil and gas industry.=20 Lay and longtime partner Jeffrey K. Skilling who served briefly as Enron's= chief executive before resigning abruptly in August rose to prominence in= the last decade through the use of innovative financial techniques designe= d to exploit a reduction in government regulation of energy.=20 Lay transformed world energy industries through his vision of new market-d= riven ways to finance natural gas and electricity production and transmissi= on.=20 The financial markets that Lay and his Enron associates created had an enor= mous effect on California's disastrous experiment in electricity deregulati= on. Critics say his influence was excessive and misguided.=20 Ken Lay was a mystic said state Sen. Steve Peace (D-El Cajon) an outspo= ken critic of Enron. Whatever he said had to make sense because he was Ken= Lay. It was hero worship. Many of the people working as economists at the = Federal Energy Regulatory Commission worshiped Ken Lay. As a consequence t= he things Enron promoted and pushed for were never challenged intellectual= ly and otherwise.=20 Lay who has a doctorate in economics had modest beginnings as the son of = a poor country preacher who did farm labor on the side to raise money for h= is children's education. In the Navy in the late 1960s Lay was assigned to= the Defense Department because of his economic acumen. He allocated Penta= gon dollars more efficiently in purchasing for the military said Mark Pal= mer chief spokesman for Enron.=20 Lay worked for Exxon and other energy firms in the 1970s amid soaring oil = prices gasoline shortages and still-regulated natural gas. He headed Houst= on Natural Gas a predecessor firm of Enron in the 1980s as falling prices= for oil and natural gas presented grave problems for Houston's energy indu= stries.=20 When the federal government allowed pipelines to carry the gas of any produ= cer Lay turned Enron into a foremost firm in the new deregulated industry= . Still Enron almost went bankrupt in the late 1980s with natural gas in = oversupply and prices falling.=20 It was then that Skilling a McKinsey & Co. consultant suggested to Lay th= at the firm trade long-term contracts for gas promising to deliver the com= modity to customers at fixed prices buying and selling contracts of varyin= g maturities the way mortgage companies deal with mortgages in Skilling'= s words.=20 The innovation started Enron's rapid growth and rise to prominence as the e= mbodiment of a new kind of energy company. In the 1990s the federal govern= ment called for deregulation of electricity.=20 Lay saw opportunities. He and Skilling created a market for contracts in el= ectricity in 1994 and by 1996 Enron was the world's leading firm doing suc= h business.=20 Lay's central idea was that by creating a market of millions of buyers and= sellers constantly taking positions power supplies could be allocated eff= iciently and prices lowered. Lay liked to lecture in an avuncular way abo= ut the new economics of energy trading.=20 Technology is changing and there's a lot more value in flexibility and op= tionality. Just about in every industry you can make them a lot more effic= ient when you have more optionality Lay said in an interview in January i= n his Houston offices overlooking the sparkling new Enron headquarters buil= ding which still is under construction.=20 As Enron's business profile grew so did Lay's political influence. He serv= ed as an energy advisor to both Bush administrations and headed Texas fund-= raising for George W. Bush's presidential campaign. Lay raised $100000 for= the Bush-Cheney campaign and with his wife Linda Lay contributed anothe= r $100000 to help finance the inaugural gala this year.=20 As the administration prepared its energy plan Lay gained national stature= as a preacher of market economics applied to electricity.=20 There's no way you can centralize a command-control environment and make t= he best decisions to have an efficient low-cost reliable electricity indu= stry Lay said.=20 His sermon was intended for California which suffered sharply higher price= s for electricity last winter to the point that private utilities fell int= o or near bankruptcy and the state budget incurred a cost of $12 billion w= hich Sacramento now is trying to recover through the sale of revenue bonds.= =20 Because Enron trading billions of dollars a day in power contracts worldwi= de had an immense effect on electricity prices Lay's preaching grated on = state officials. Driven to intemperance state Atty. Gen. Bill Lockyer said= in May that he'd like to escort Lay to a prison cell.=20 But more than economic philosophy was behind Lay's goading of California. T= he state's debacle gave energy deregulation a bad name and chilled deregula= tion moves by many other states.=20 That in turn reduced growth prospects for Enron. The promise of continued g= rowth in deregulation had helped make Enron a Wall Street darling. Its stoc= k price at one point nearly $90 a share versus less than $10 now pushed u= p the value of Enron stock options held by almost all employees but owned = in great amounts by Lay Skilling and other company officers.=20 Lay cashed in last year converting options for a gain of $123 million whi= le Skilling gained $62 million by converting his options. As they cashed in= Enron was encountering other problems. Attempts to set up trading markets= in water and broadband Internet transmission were floundering. A major pow= er plant venture in India was in grave economic and political trouble.=20 But in the last month Enron revealed that it had reduced the firm's equity= value by more than $1 billion due to write-offs in a hitherto hidden partn= ership.=20 Revelations then cascaded. The firm had 33 such partnerships which had bil= lions of dollars in debt for which Enron was liable. Lay and Skilling piled= up debt in hidden partnerships analysts explain because the firm needed = huge amounts of debt to support its greatly expanding levels of trading in = electricity natural gas and other commodities.=20 But the firm could not support such debt and still retain its credit rating= growth rate and high stock price. After weeks of gamely protesting that t= he business was sound and that he personally took offense at investment ana= lysts' suggestions of impropriety Lay fell silent.=20 *=20 Times staff writer Nancy Vogel in Sacramento contributed to this report. PHOTO: With the takeover of his once-soaring firm Enron chief Kenneth Lay'= s career is in tatters. PHOTOGRAPHER: Reuters=20 Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 BUSINESS DYNEGY TIMELINE 11/10/2001 Houston Chronicle 3 STAR 3 (Copyright 2001) Natural Gas Clearinghouse is formed by the investment banking firm Morgan S= tanley and the law firm Akin Gump Strauss Hauer & Feld. Six natural gas = pipelines got together to create the gas marketing firm.=20 The U.S. Federal Energy Regulatory Commission begins the long process of de= regulating the natural gas business which ultimately created huge markets = for the company and competitors such as Enron. NGC introduces its energy store concept looking to create a one- stop sh= opping outlet for all energy products and services.=20 NGC makes initial public offering.=20 NGC acquires Trident NGLs.=20 NGC merges with the natural gas business unit of Chevron Corp. and Chevron'= s Warren Petroleum Co. subsidiary.=20 In February NGC announces a deal to expand its energy store with the pur= chase of Destec Energy's interest in 20 U.S. power plants for $1.27 billion= . The Destec deal is the company's first purchase of power-generation asset= s.=20 With deregulation right around the corner we have been aggressively looki= ng to acquire major power-generation assets to complement the expertise tha= t we already have in our power marketing Watson said.=20 NGC's stock trades around $22 per share in late February when the company d= iscloses that excessive high-cost inventories of natural gas liquids or NG= Ls would cut operating income by $40 million. The price plunged to the mid= teens before partially recovering to about $18. Watson says NGC has put com= munications and information- reporting systems in place to alert management= to developing problems much earlier than they learned of the NGL-related p= roblems.=20 In May NGC is honored as the Chronicle 100 company of the year for its ste= llar 1996 results.=20 NGC buys Southern California Edison Assets.=20 In March Chuck Watson and Bob McNair team up to put in the winning bid of = $530000 for the grand champion steer named Rowdy. The pair pay the record= price days after joining city officials on a trip to help lobby for an NFL= team.=20 In June NGC adopts a new name - Dynegy - a word created by merging dynamic= and energy. The name NGC no longer captures who we are and who we have be= come says Watson the company's chief executive. The company will have th= ree logos all derived from the Chinese tangram a collection of seven red= yellow and blue geometic shapes that can be arranged in any number of comb= inations.=20 In December a Dynegy joint venture announces the purchase of a power plant= and other assets from San Diego Gas & Electric.=20 In June Dynegy agrees to a $2 billion takeover with Illinova an Illinois = electric and gas company that would give the energy marketing company elect= ric plants and lines located in major Midwest markets. This deal the large= st in the company's history to date brought one company trying to move bey= ond the traditional utility business together with a trading company moving= into that business.=20 In October Watson who owns the Houston Aeros hockey team announces he wo= uld help fund the campaign against the downtown arena. The arena measure is= later defeated but was approved in a new vote the next year after Watson = agrees to support it.=20 In February Dynegy sells natural gas pipelines and processing plants for $= 308 million in cash. It is part of a planned $600 million asset sale to red= uce its debts as Dynegy closed its $2 billion merger with Illinois utility = Illinova.=20 In August Dynegy agrees to buy two power plants in the Hudson River Valley= region of New York from CH Energy and two other utilities for $903 million= . The deal marks Dynegy's expansion into the Northeast power market.=20 Dynegy branches into the broadband Internet and telecommunications busines= ses by buying privately held Extant for $151.3 million in cash and stock.= =20 In July Dynegy says it will spend about $590 million to buy natural gas st= orage facilities in the United Kingdom in a deal that will serve as the cor= nerstone of its European energy network. It will buy BG Storage a wholly o= wned subsidiary of BG Group. The deal is part of Dynegy's strategy to repli= cate in Europe the energy delivery network it has built in the United State= s.=20 In September after 17 years in business Dynegy launches its first ad camp= aign. The spots released in conjunction with the PGA Tour Championship em= phasize the firm is passionate about what it does.=20 On Nov. 9 Dynegy announces plans to purchase Enron Corp. Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 BUSINESS POWER PLAY / ENRON TIMELINE 11/10/2001 Houston Chronicle 3 STAR 4 (Copyright 2001) Houston Natural Gas merges with Omaha Neb.-based InterNorth to create the = company that would eventually be named Enron Corp. The deal integrated seve= ral pipeline systems to create the first nationwide natural gas pipeline sy= stem.=20 Ken Lay who had been chief executive officer of Houston Natural Gas is na= med chairman and chief executive officer. The company chooses the name Enro= n after rejecting Interon. Enron discovers that oil traders in New York have overextended the company'= s accounts by almost $1 billion. The company ultimately works this loss dow= n to $142 million. This leads to Enron developing a myriad of services to h= elp reduce the risk of price swings for everything from gas to advertising = space.=20 Enron opens its first overseas offices in England to take advantage of the = country's privatization of its power industry. The company's major strategy= shift - to pursue unregulated markets in addition to its regulated pipelin= e business - is revealed to executives in a gathering that became known as = the Come to Jesus meeting.=20 Jeffrey Skilling joins the company and Enron launches its Gas Bank a progr= am under which buyers of natural gas can lock in long- term supplies at fix= ed prices. The company also begins to offer financing for oil and gas produ= cers.=20 Enron acquires Transportadora de Gas del Sur Enron's first pipeline presen= ce in South America and the start of a push to expand on the continent.=20 Enron's Teesside power plant in England begins operation one of the first = big successes for the company's international strategy.=20 Enron makes its first electricity trade beginning what will turn out to be= one of the company's biggest profit centers in the next few years.=20 Enron Europe establishes a trading center in London marking the company's = entry into European wholesale markets. Europe is now considered one of the = company's prime growth markets.=20 Construction begins on the first phase of the Dabhol power plant in India. = The $2 billion project would be plagued with political problems throughout = its construction. Enron puts its stake in the project up for sale in 2001.= =20 In December Skilling is elected president and chief operating officer and = will continue in his role as chairman and CEO of Enron Capital & Trade Reso= urces.=20 To expand its electricity business Enron buys Portland General Electric Co= rp. the utility serving the Portland Ore. area. In 2001 Enron agrees to= sell Portland General Electric to Northwest Natural Gas Co. for about $1.9= billion.=20 Enron Energy Services is formed to provide energy management services to co= mmercial and industrial customers.=20 Enron acquires Wessex Water in the United Kingdom which forms the basis fo= r its water subsidiary Azurix.=20 Enron forms its broadband services unit. The first phase of the Dabhol proj= ect begins operations. One-third of Azurix is sold to the public in an init= ial public offering. After an early rise shares fall sharply as the year g= oes on and the problems facing the company become apparent. Enron Online t= he company's commodity trading Internet site is formed. It quickly becomes= the largest e-business site in the world. Enron Energy Services turns its = first profit in the fourth quarter.=20 Rebecca Mark resigns from her position as Azurix chairwoman and the company= announces a plan to take the troubled water subsidiary private.=20 Annual revenues reach $100 billion more than double the year before refle= cting the growing importance of trading.=20 Enron Field is opened in downtown Houston. In addition to buying the naming= rights Enron Chairman Ken Lay helped raise financial support for the cons= truction project.=20 The Energy Financial Group ranks Enron the sixth-largest energy company in = the world based on market capitalization.=20 Enron and strategic investors IBM and America Online launch The New Power= Co. to provide electric service in a deregulated market.=20 In February Jeff Skilling takes over as chief executive officer. Ken Lay r= emains as chairman.=20 In March Enron and Blockbuster call off deal to bring movies into homes ov= er the Internet.=20 In April Enron discloses it is owed $570 million by bankrupt California ut= ility Pacific Gas & Electric Co.=20 In August Skilling unexpectedly resigns for personal reasons. Lay takes ba= ck the CEO job. Wall Street starts cranking up its requests for Enron to pr= ovide more detailed financial information about its performance.=20 In October Enron releases third-quarter earnings with $1.01 billion in ch= arges including $35 million related to investment partnerships formerly he= aded by Andrew Fastow Enron's chief financial officer. Fastow is replaced = as CFO. The Securities and Exchange Commission launches a formal investigat= ion into the partnerships.=20 In November Enron restates earnings for 1997 through 2000 and the first th= ree quarters of this year.=20 On Friday Dynegy announces it wants to merge with Enron. Enron's stock clo= ses at $8.63 per share an 89 percent drop since the beginning of the year. Mug: Jeffrey Skilling=20 Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 BUSINESS POWER PLAY / Enron had been a political heavyweight / Critics decried influ= ence of Ken Lay in White House DAVID IVANOVICH Houston Chronicle Washington Bureau Staff 11/10/2001 Houston Chronicle 3 STAR 4 (Copyright 2001) WASHINGTON - Until a few weeks ago Enron Corp. was the star of the Washing= ton lobbyist corps.=20 Enron Chairman Ken Lay was known to have the ear of his longtime friend and= political ally President Bush. Vice President Dick Cheney had unveiled a national energy strategy very muc= h to Enron's liking while one of the company's favorite electricity regula= tors Texas' Pat Wood III had been installed as the new head of the Federa= l Energy Regulatory Commission.=20 Critics feared the Houston-based energy and trading giant exerted far too m= uch influence both in Congress and in the Bush White House.=20 Now after the company's implosion Enron's legendary political might is ev= aporating as well political observers say.=20 Just a matter of weeks or months ago Enron was still the 800- pound goril= la said Steven Weiss a spokesman for the Washington- based Center for Re= sponsive Politics a political watchdog group. It was getting into any mee= ting it wanted to.=20 Relationships are still existent and Bush is unlikely to completely ignor= e Ken Lay. But one would have to think the amount of influence that Ken Lay= could exert now pales in comparison to the influence he could have exerted= just a month or more ago.=20 Now that Dynegy has agreed to take over Enron the companies' role in gover= nment will be determined by Chuck Watson Dynegy's chief executive officer.= =20 While Enron has been such a player in Washington Dynegy is less known insi= de the Capital Beltway. But that's not to say Dynegy has no political pull = on Capitol Hill.=20 Ken Lay certainly can get meetings with senators but so can Chuck Watson= a Senate staffer said.=20 While Dynegy may be attracted to Enron's energy trading whiz the company m= ay be desirous of Enron's political expertise as well. While Watson has had= a presence on the national stage his role in Houston's stadium votes show= s he is hardly allergic to politics.=20 Enron's recent troubles however may leave a stain. With the Securities an= d Exchange Commission conducting an investigation into some of the company'= s business dealings many politicians are likely to be wary.=20 Politicians perhaps better than anyone else can smell a rotten egg Wei= ss said. Who would want it reported in the newspaper that they are associa= ted with a company that is under investigation?=20 Enron's lobbyist in Washington Linda Robertson could not be reached for c= omment.=20 A setback among Washington's elite would be a novel experience for Lay and = other Enron officials. In a city where access is everything Lay has proved= - time and again - his political savvy.=20 A one-time energy policy-maker for Richard Nixon Lay successfully champion= ed deregulation of the natural gas pipeline industry and has led the effort= to open up the electricity markets as well.=20 A Republican Lay served as co-chair of the host committee for the GOP's na= tional convention in Houston in 1992 when his friend George Bush the elder= was nominated for a second term. And yet there was Lay a few years later = playing golf with the elder Bush's political nemesis Bill Clinton and adv= ising the Democratic administration on energy.=20 The company has excelled at snatching up political heavyweights as they lea= ve public office. Enron has attracted the likes of former Secretary of Stat= e James Baker III and one-time Clinton White House chief of staff Thomas M= ack McLarty.=20 Enron's stable of political lobbyists became a who's who of Washington insi= ders from former Christian Coalition head Ralph Reed to one-time Energy Re= gulatory Commission Chairwoman Elizabeth Betsy Moler.=20 And by all accounts Enron - and Lay especially - rank among the most munif= icent contributors to George W. Bush's political career. Lay's name was men= tioned repeatedly as Bush drew up his Cabinet and while he did not join th= e government he played a role in helping craft Bush's energy strategy.=20 Lay and other Enron officials spent $2.1 million lobbying Congress and the = White House last year the Center for Responsive Politics reported.=20 In fact 71 senators and 188 House members have received contributions from= Lay and other Enron officials the watchdog group found.=20 Questions about Lay's influence over the Federal Energy Regulatory Commissi= on sparked an investigation last summer by Congress' General Accounting Off= ice.=20 Curt Hebert then the commission chairman accused Lay of trying to prod hi= m into changing his position on an issue of key concern to Enron open acce= ss by independent electricity generators to the power lines owned by utilit= ies in exchange for Lay's political support.=20 The GAO found no evidence of wrongdoing by either party. Three months after= the dispute became public Hebert resigned from the commission. He was suc= ceeded by Wood whom Enron officials had championed as smart hard-working= fair.=20 Just one month ago Enron's political muscle appeared undiminished. Enron h= eld a conference in Washington on energy policy during the first week of Oc= tober attracting the likes of Wood Senate Energy Committee Chairman Jeff = Bingaman D-N.M. and former Energy Department Secretary James Schlesinger.= =20 Since the start of the company's free-fall Enron officials have been less = on Capitol Hill although that may have merely reflected the city's preoccu= pation with the war on terrorism and the anthrax scare. Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 BUSINESS POWER PLAY / Sale suddenly switches office outlook downtown RALPH BIVINS Staff 11/10/2001 Houston Chronicle 3 STAR 1 (Copyright 2001) THE sale of Enron Corp. is going to punish Houston's downtown office market= - emptying more office space at a time when several buildings are going up= .=20 Enron and its purchaser Dynegy are both hefty users of downtown office sp= ace and with staff cutbacks likely they will need a lot less of it. Enron's 40-story office tower which is under construction on Smith Street= is expected to be completed next year.=20 If they do go through with the deal that building is not going to be the = Enron building. It's going to become the Dynegy building said office brok= er Sanford Criner of the Trione & Gordon realty firm.=20 Dynegy which leases 700000 square feet in the Wells Fargo Plaza at 1000 L= ouisiana would jump at the chance to operate in the new trading floors at = the new Enron Center South according to a number of downtown office broker= s.=20 There's no question Dynegy has been looking to get a major league trading = floor for a long time Criner said. They definitely covet the Enron tradi= ng floor.=20 The new 1.2 million-square-foot Enron tower is a palace of energy trading t= echnology with miles of telecommunications cable running throughout.=20 The building's matching pair of sweeping staircases were intended to lead t= o the corporate dens of Enron Chairman Ken Lay and former CEO Jeff Skilling= but probably will be used by Dynegy Chairman Chuck Watson.=20 John Sousa a spokesman for Dynegy said Thursday that the firm's current W= ells Fargo space is good and it was too soon to speculate about things like= office space.=20 We're satisfied with our current location Sousa said.=20 A number of office brokers however suggest Dynegy would move over to the = Enron building and attempt to sublease at least some of the space in Wells = Fargo Plaza.=20 Enron's importance to the Houston office market extends beyond the new buil= ding. The company occupies about 3 million of the 42 million square feet of= office space available downtown if every small building is counted.=20 Enron occupies its existing 1.25 million-square-foot headquarters building = at 1400 Smith 500000 square feet of space in Three Allen Center 60000 s= quare feet in the 500 Jefferson building and 40000 square feet in the 600= Jefferson building.=20 Enron has already moved a few employees into its new building which had be= en slated to be fully occupied by next summer.=20 This has some real implications said George Carpenter of Carpenter Realt= y. Who knows when the dust settles where this thing is heading?=20 TrizecHahn which owns the Cullen Center and Allen Center properties had b= een expecting Enron to move out of at least a portion of those buildings wh= en the new Enron Center South building was complete.=20 We're bullish on Houston said TrizecHahn spokesman Rick Matthews. It's = likely to remain a core market for us.=20 Enron's shrinkage will come on top of several other moves that will empty d= owntown office space.=20 It's going to be a blood bath next year said one Houston office broker w= ho asked that his name not be used.=20 About 500000 square feet of space will become vacant next year in the Chev= ron Tower according to Trione & Gordon. A number of Chevron employees will= be moving into the Texaco Heritage Plaza building as a result of the Chevr= on and Texaco merger.=20 Halliburton another huge downtown office tenant will be moving out of dow= ntown to new buildings in the Westchase area in the next few years leaving= behind a large hole of vacant space at 601 Jefferson.=20 While the demand for office space is beginning to fall the supply is about= to increase.=20 The 5 Houston Center a 27-story structure that will be complete next year= will open with a significant number of signed tenants. But as major corpor= ate tenants such as Ernst & Young Jenkens & Gilchrist and Jackson Walker m= ove into the building they will leave behind vacant space in others.=20 Century Development's 1000 Main building is scheduled to be finished in 200= 3. The 783000-square-foot project which will have Reliant Resources as it= s main tenant still has more than 200000 square feet of space to lease a= ccording to Trione & Gordon.=20 And even more space will be coming onto the market when the 32- story Calpi= ne Center office tower is completed at 717 Texas Ave. in 2003.=20 With these changes the health of the downtown office market has gone from = being robust to sickly in a short period of time.=20 The Central Business District is going to be going through some rough time= s said Bob Parsley chief executive officer of Colliers International rea= lty firm.=20 Class A space - the most expensive prime office space - in downtown is now= over 97 percent occupied a very high rate that encouraged developers to s= tart new office towers.=20 The looming downturn in the office market is not expected to be nearly as b= ad as the crash of the 1980s but there could be some painful times ahead f= or downtown landlords.=20 There are going to be some big blocks of space in downtown Houston said = Candace Baggett president of the Calibre Group realty firm.=20 . . .=20 Location of Enron's operations and Dynegy's headquarters=20 1. Enron headquarters 1400 Smith 1.25 million square feet.=20 2. Enron Center South (under construction) 1.2 million square feet.=20 3. Three Allen Center 500000 square feet leased by Enron=20 4. 600 Jefferson 40000 square feet leased by Enron=20 5. 500 Jefferson 60000 square feet leased by Enron=20 6. Dynegy headquarters Wells Fargo Plaza 700000 square feet.=20 7. Enron Field Opened 2000 Map: 1. Location of Enron's operations and Dynegy's headquarters (color te= xt) Photos: 2. Enron employees kept their cell phones in use outside the c= ompany's downtown offices Friday afternoon. Dynegy's purchase of Enron deal= s a blow to the city's office space market. Enron's shrinkage will come on = top of several other moves that will empty downtown office space (p. 4)=20 Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 BUSINESS POWER PLAY / Enron Field name may fall as quickly as energy empire RALPH BIVINS Staff 11/10/2001 Houston Chronicle 3 STAR 1 (Copyright 2001) BASEBALL history is written fast these days.=20 As Enron Corp. the massive Houston energy-trading company is to be bought= out by Dynegy the name Enron Field may go with it. Enron paid big money - $100 million - to put its name on the retractable-ro= of stadium downtown. It cost a lot to get the name but it gave Enron a lot= of marketing firepower and put the company's name on the lips of millions = of Astros fans.=20 If Dynegy completes the acquisition of Enron Corp. as expected Dynegy also= may get the naming rights to the Astros' stadium.=20 With the name Enron fading in the merger it appears possible the 42000-= seat baseball stadium would take the Dynegy name.=20 If they do something with the company that name goes with it said Pam G= ardner president of business operations for the Houston Astros.=20 Dynegy Chairman Chuck Watson said Friday that no decision has been made abo= ut renaming the baseball stadium.=20 However Dynegy did register the domain name dynegyfield.com with Verisign= an Internet domain name registrar on Thursday.=20 Enron Field would not be the first sports facility to undergo a name change= .=20 The Compaq Center home of the Houston Rockets took the Compaq name in 199= 7 after being called The Summit for many years. And the name may be up in t= he air again as Compaq Computer Corp. contemplates a merger with Hewlett-Pa= ckard.=20 The stadium for the St. Louis Rams football team was renamed Dome at Americ= as Center after American Airlines bought former namesake TWA airlines.=20 It's not catastrophic if you have to change the name of the arena said D= ean Bonham of Bonham Group a sports marketing consulting firm.=20 Sometimes trying to change the name of a stadium can be hard said Kurt Hun= zeker editor of Team Marketing Report a sports business newsletter. The o= riginal name for a stadium can be adopted into fan's vocabulary and the se= condary names for stadiums don't always stick.=20 Many baseball fans in Cincinnati have had a hard time adjusting to calling = Riverfront Stadium by its new name of Cinergy Field Hunzeker said.=20 Sometimes the media refuse to cooperate with the name changes because of tr= adition or a simple refusal to give into commercialism. The Denver Post fo= r example has refused to adopt the new name of Invesco Field at Mile High = Stadium.=20 The deal for a new football stadium for the Houston Texans is similar to th= e arrangement with Enron Field said Steve Patterson senior vice president= of the Texans.=20 The Texans' field will be called Reliant Stadium. If Reliant Energy is boug= ht out by another company however the acquiring company will have the rig= ht to change the name of the stadium Patterson said. Photo: Enron Field seen on opening night in March 2000 could have a new n= ame next season (color)=20 Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 Market forces: Worries over Royal Bank's Enron exposure NEIL HUME 11/10/2001 The Guardian Copyright (C) 2001 The Guardian Source: World Reporter (TM) Executives at Royal Bank of Scotland are among those keeping their fingers = crossed that the urgent talks to save the debt-stricken energy trading grou= p Enron are successful.=20 In recent days it has emerged that Britain's second biggest bank by market = capitalisation is a lender to the US group. At the moment it is not clear how much money the Edinburgh bank has lent to= Enron and whether any of it is secured but speculation in the market plac= e suggests that the figure could run into millions. It seems RBoS was invol= ved in one of the credit facilities arranged for Enron which needs billion= s of dollars of new money to keep it afloat.=20 Royal Bank was yesterday keeping very quiet about the size of the exposure= but worries about the Enron situation were enough to push the shares down = 44p to pounds 16.70 on a bad day for the banking sector. Elsewhere Barclay= s fell 88p to pounds 21.12 HSBC lost 9.5p to 792.5p and Lloyds TSB dipped= 17.5p to 713p as investors decided it was time to take some profits.=20 On the other side of Atlantic Enron was locked in talks with rival Dynegy = over a $7bn (pounds 4.81bn) rescue takeover.=20 With Wall Street giving up strong gains overnight as investors decided to = book profits after the recent strong run London's top stocks started the d= ay on the back foot. Leading shares then trimmed a 50-point deficit as buye= rs emerged for heavyweight oil stocks Shell 6p higher at 514.5p and BP = 9p stronger at 565p after Saudi Arabia suggested the mood was shifting tow= ards a production cut of 1.5m barrels at next week's Opec meeting. News tha= t Russian oil companies are considering a cut also helped.=20 That was as good as it got. With Wall Street failing to provide a lead the= FTSE 100 drifted back eventually closing 33.9 points lower at 5244.2. Ho= wever dealers were not too downhearted by the performance pointing to the= index's 115-point advance over the week.=20 Cash rich Cable & Wireless took the FTSE 100's wooden spoon sliding 18.25p= to 330p with dealers attributing its weakness to the re-emergence of talk = that it is poised to make a big acquisition. Opinion was divided over the p= otential target. Most dealers plumped for Colt Telecom which has been lin= ked with C&W in recent weeks. Sure enough the shares responded ending the = day 10.5p better at 158p.=20 Others reckoned C&W had its eye on Energis and had approached 30% sharehold= er National Grid with a view to buying its stake. Whatever the truth of tha= t rumour analysts think Energis would be a better bolt-on acquisition for = C&W than Colt. Energis shares eased a penny to 89p.=20 Invensys the industrial controls group firmed 4.25p to 78.75p on hopes t= hat a positive outlook statement will accompany Thursday's interim results.= The figures will also provide analysts with their first chance to quiz new= chief executive Rick Haythornthwaite on his plans to turn around the heavi= ly indebted company.=20 Among the mid caps Carphone Warehouse underperformed falling 2.5p to 109p= as worries resurfaced about the demand for mobile phones in the Christmas= trading period .=20 Joint broker CSFB caused the trouble. With the outlook uncertain CSFB said = it had taken the precaution of lowering its pretax profits forecast to a w= orst case scenario pounds 55m. Its previous estimate was pounds 67.3m. CSF= B tried play down the significance of the downgrade arguing that Carphone = was likely to outperform its rivals in the next month but many traders int= erpreted it as an attempt to lower the City's expectations.=20 Furniture group MFI was heading in the other direction improving 10.5p to = 130p after house broker Deutsche Bank raised hopes that Wednesday's trading= update could impress. The German investment bank believes business has bee= n good at MFI in recent months and the company is on course to meet its pre= tax profit forecast of pounds 63.5m.=20 In an otherwise dull tech sector Autonomy the intelligent software group= advanced 14.75p to 313p. Traders heard talk that the company had secured a= couple of big contracts that were put on hold after September's terrorist = attacks.=20 There was also a flurry of interest in Debenhams the department store gro= up on speculation that the company will be tipped in a weekend newspaper. = The shares finished 23p higher at 395p.=20 In the smaller companies world retail investors were chasing Redbus Interh= ouse the web-hosting company run by John Porter the multi-millionaire Te= sco heir and son of Dame Shirley Porter.=20 Dealers said the investors were betting that Monday's third quarter figures= would top expectations. Given the over capacity in the web-hosting market = and the fact Redbus admitted with interim results in September that demand = had fallen most traders took the view that this was a bold and potentially= foolhardy gamble.=20 Elsewhere those retail investors suckered into Character Group the toy a= nd games maker when its shares hit 30p late on Thursday were nursing losse= s.=20 Before the market opened the company said that while one of its division p= roduced a range of Harry Potter gift products it was not an official Potter= licensee. Character which had almost doubled in the previous session she= d 6.75p to 24.25p.=20 There was also some pain for shareholders of Brammer the industrial servi= ces group which fell 61.5p to 256p after warning full-year pretax profits = would be 25% lower than last year.=20 Engineering group Senior gained 0.25p to 29.5p after a stock overhang was c= leared. Traders believe the shares could enjoy a good run next week especi= ally as bid rumours are floating around. Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 Business Dynegy snaps up Enron for $9.5bn Chris Ayres in New York 11/10/2001 The Times of London News International Final 5 60 (Copyright Times Newspapers Ltd 2001) Enron the troubled US energy company with close ties to President Bush wa= s yesterday bought for $9.5 billion (Pounds 6.5 billion) by its smaller riv= al Dynegy.=20 The move brings to a close one of the most spectacular Wall Street downfall= s of recent years. Shareholders in Enron who have seen more than $60 billi= on wiped off the value of the company this year will get about 0.27 of a D= ynegy share for every share they own in Enron valuing the deal at $10.41 p= er Enron share. The deal comes amid a Securities & Exchange Commission investigation into E= nron's controversial business practices. The struggling company also admitt= ed on Thursday that it had overstated its profits by nearly $586 million an= d understated its debt by $2.6 billion over the past four years.=20 As part of the deal ChevronTexaco which owns 27 per cent of Dynegy will = invest $2.5 billion in the merged company. Shares of Dynegy gained $2.26 to= close at $38.76. Enron shares rose 22 cents to $8.63. The announcement on = the merger of the two Houston-based companies came after the US markets clo= sed.=20 Before the deal was announced Enron saw its credit rating cut by Moody's t= o a notch above junk status. Meanwhile Enron's exit from a $2.9 billion = power plant project in India was blocked by the Bombay High Court.=20 Fears also heightened yesterday that US energy traders were beginning to by= pass Enron's Internet-based energy trading systems because of concern over = the company's ability to settle transactions and pay back collateral. So fa= r Enron's trading operations have remained immune from the disasters to hi= t the company on Wall Street.=20 The past few weeks have seen the departure of Enron's finance director And= rew Fastow and its treasurer Ben Glisan. The company's chief executive J= effrey Skilling resigned in August.=20 However some analysts expressed scepticism at the merger. Carole Coale an= analyst with Prudential Securities said she was puzzled as to why Dynegy= 's management would want to take on the uncertainties and potential liabili= ties associated with a merger with Enron.=20 Enron is America's biggest buyer and seller of natural gas and one of the c= ountry's ten largest companies with revenues last year of more than $100 bi= llion. Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 UK jobs on the line 11/10/2001 Daily Mail Associated Newspapers Ltd. 1ST 81 (Copyright 2001) UP TO 4000 UK jobs are at risk as US energy group Enron seeks a 5.5bn resc= ue from rival Dynegy. Enron owns Wessex Water two power plants on Teeside = and runs the world's biggest energy-trading operation. Those are the jobs b= elieved to be most at risk.=20 US regulators are investigating off-balance sheet deals allegedly struck by= former finance director Andrew Fastow who has since left the company. Enron's managing director and chief counsel were sacked earlier this week f= or their roles in the affair. Enron took a 685m charge prompting a 90pc fa= ll in its share price. This week it restated four- year profits down by 22= pc to 405m.=20 Rating agency Moody's downgraded Enron's debt to its lowest investment grad= e warning another cut could follow. Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 Dynegy to get prime downtown real estate in Enron deal By PAM EASTON Associated Press Writer 11/10/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. HOUSTON (AP) - Enron Corp. Chairman Kenneth Lay envisioned the four trading= floors within his company's newly constructed silver glass tower - that wa= s to be its new world headquarters - as an energy trading center much like = the Chicago Mercantile Exchange.=20 They are pretty spectacular Enron spokeswoman Karen Denne said of the tr= ading floors following the announcement of Dynegy Inc.'s plans to buy Enron= for about $8 billion in stock late Friday. It is a huge state-of-the-art = trading floor. They are really neat. But the trading platforms likely won't be Enron's for long.=20 If the proposed deal between the two Houston-based energy trading companies= is approved the $200 million 40-story building will be among Dynegy's ne= w assets in the purchase of its much larger rival. The ornate building com= plete with metal sunshades and fins that deflect the sun and lower energy c= osts is scheduled for completion sometime next summer.=20 The last three weeks haven't been a whole lot of fun Lay said during a p= ress conference about the merger Friday at Dynegy's headquarters just a few= blocks away from where an oval shaped skybridge encircles Smith Street.=20 The enclosed air conditioned bridge connects what was to be Enron's new he= adquarters with its current building on the opposite side of the street.=20 Enron had long-term plans to complete its urban campus with a third tower a= fter building a second tower in 1999 the first major office building proje= ct in downtown Houston in more than a decade.=20 Lay and his former chief executive officer Jeff Skilling were to have sev= enth-floor offices overlooking the trading floors. Two curved grand stairwa= ys connect the offices to the floors below.=20 But Enron's future started changing shortly after Skilling's surprise resig= nation in August.=20 Last month Enron reported major losses in third quarter earnings. The compa= ny's stock then tumbled 80 percent in the past three weeks as investors gre= w increasingly concerned that serious financial problems were being hidden = from shareholders through business partnerships now under investigation by = the Securities and Exchange Commission.=20 A day after Lay expressed his confidence in his chief financial officer And= rew Fastow who managed those partnerships Fastow was ousted in an attempt= to regain investor confidence.=20 It didn't work and Skilling has since been called to testify before the SE= C about the partnerships.=20 Then Dynegy stepped in and one Houston company came to the rescue of anoth= er Prudential Securities Inc. analyst Carol Coale said.=20 Enron needed Dynegy. They needed a rescuer Coale said. The run on Enron= stock was similar to a run on a bank. Once things start to capitulate it c= an run right down into liquidity.=20 While Dynegy says its too early to discuss layoffs what happens to the nam= e of the Houston Astros' Enron Field or the future uses for Enron's buildin= gs University of Houston economist Barton Smith doubted the company will l= et the prime real estate go unused.=20 At one time Ken Lay and his family had a vision of Houston having an energ= y exchange and I think that vision is going to continue Smith said. This= brings Dynegy which was a relatively small player in as a pretty strong = force.=20 Smith said reductions in philanthropic giving are likely. Enron has contrib= uted to many Texas schools including the University of Houston Rice Unive= rsity the University of Texas and Southern Methodist University.=20 While the company's philanthropy has gained fans in Texas many in Californ= ia plagued by power shortages earlier this year still resent Enron for it= s outspoken support of deregulation.=20 The principles of karma seem to be working here said Harvey Rosenfield = founder of a California consumer advocacy group. Here Enron was one of the= chief proponents of deregulation and took advantage of it and benefitted e= normously and now is reaping the consequences.=20 Texas economists say ripple effects of the Dynegy-Enron merger on Houston's= economy will be minimal even if the combination forces layoffs.=20 There are some recessionary pressures going on in the United States but H= ouston is probably in a better position than any city I know of to dampen t= hose pressures said Mark Baxter director of the Maguire Energy Institute= at Southern Methodist University. The Houston market is unique in that as= pect.=20 But Michelle Michot Foss director of the Energy Institute at the Universit= y of Houston said the nation's fourth-largest city isn't immune to a weake= ning national economy.=20 We do have a three-pronged problem in town which is Continental Compaq a= nd Enron she said. But there is no way this is as bad as (the oil bust y= ears of) 1986 and 1987.=20 Houston-based Continental Airlines has cut 12000 jobs and reduced its flig= ht schedule in the wake of Sept. 11's attacks in New York Washington D.C. = and Pennsylvania. Meanwhile Hewlett-Packard is attempting to buy Compaq a= lso based in Houston which could result in additional layoffs from the com= puter maker.=20 The whole debacle with Enron has been very unfortunate Smith said. Enro= n in some ways was the icon of Houston with the merger of Compaq. Now it = looks as if it's going to be Dynegy.=20 ---=20 On the Net: Enron Corp.: http://www.enron.com.=20 Dynegy Inc.: http://dynegy.com. Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 Enron India Pwr Unit Sale Faces Review After Dynegy Deal 11/10/2001 Dow Jones Energy Service (Copyright (c) 2001 Dow Jones & Company Inc.) SINGAPORE -(Dow Jones)- The sale of Enron Corp's (ENE) 65% controlling equi= ty stake in the troubled Indian Dabhol Power Company will face a review i= f Dynegy Inc's (DYN) $8 billion rescue bid for Enron is approved by regulat= ors an Indian banking executive said Saturday.=20 The executives were attending talks held in Singapore to assesses potential= buyers for Enron's stake in DPC. Once this merger is through we will have to take a review of the entire m= atter P.P. Vora chairman and managing director of Industrial Development= Bank of India (P.IDB) told Dow Jones Newswires.=20 Vora didn't say whether Dynegy would retain or sell Enron's controlling sta= ke in the DPC if a merger was approved. He declined to comment on the speci= fics of the review.=20 Domestic Indian lenders have provided $1.4 billion of the project's total p= rojected cost of $2.9 billion. IDBI's exposure is in the excess of 20 billi= on rupees ($1=3DINR48.03) and the bank runs the risk of going deep into th= e red if the project goes bust.=20 The two-day closed door meeting in Singapore - originally scheduled to wrap= up Friday - ended inconclusively Saturday. Talks revolved around two poten= tial buyers of Enron's stake in the DPC Tata Power Co. Ltd. (P.TPW) and BS= ES Ltd. (P.BSX) - heavyweights in the Indian power sector.=20 Enron wants to sell its controlling equity stake in the $2.9 billion projec= t due to payment defaults by the plant's sole customer - the Maharashtra St= ate Electricity Board - and the Indian federal government's failure to hono= r payment guarantees.=20 A Bombay-based analyst with a leading Indian brokerage agreed that the issu= es surrounding the sale of Enron's stake in the DPC would have to reevaluat= ed from scratch.=20 Some post-takeover 'cleaning-up' in the merged entity will be expected. Dy= negy really need to see what their energy interests are and whether India w= ill figure in them the analyst said.=20 The analyst doubted Dynegy would take over Enron's stake in the DPC itself = in an attempt to revive it. Prima facie it appears unlikely. It (Dynegy) = has not really got into independent power projects outside the U.S. the a= nalyst said.=20 Indian media reports over the past two months have said Enron wants $1 bill= ion for its stake in Dabhol.=20 However commentators say Enron may have to sell at a discount given the co= mpany's deepening financial woes. A discounted sale would remain the case f= or Dynegy without a doubt post-takeover the analyst said.=20 DPC officials were unavailable for comment at the time of writing.=20 Indian banking executives remained tight-lipped on the outcome of the Singa= pore talks but described negotiations as very fruitful and successful.= =20 There was full cooperation from all sides. Certainly we have moved forwar= d but there's no decision (on a buyer for Enron's stake) as yet said IDB= I Executive Director A.K. Doda. I'm hopeful if we go through these routes = it'll lead somewhere.=20 The IDBI's Vora said all concerned parties had no immediate plans to hold= any further talks.=20 Asked whether Tata Power was the frontrunner as many analysts believe Dod= a said: That's their guess.=20 Analysts said Tata Power and BSES wouldn't necessarily be out of the runnin= g after the Dynegy-Enron merger. I think Dynegy will be relatively more wi= lling to diversify DPC and that wouldn't change the equation vis-a-vis Tata= and BSES he said. Overall it's positive.=20 Dabhol is India's largest single foreign investment. MSEB holds a 15% stake= while General Electric Co. (GE) and Bechtel (X.BTL) own 10% each.=20 DPC's domestic lenders include ICICI Ltd. (P.ICC) Industrial Development B= ank of India (P.IDB) IFCI Ltd. (P.ICI) and State Bank of India (P.SBI).=20 Loans by foreign lenders including ABN Amro Bank of America Corp. and Cit= igroup Inc. however are backed by government guarantees while domestic l= enders' loans are not.=20 -By Sri Jegarajah Dow Jones Newswires 65-415-4066 sri.jegarajah@dowjones= .com Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 Talks to salvage multibillion dollar Enron India project goes into third da= y 11/10/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. SINGAPORE (AP) - Talks in Singapore to assess possible buyers for U.S.-base= d Enron Corp.'s controlling stake in the troubled Indian Dabhol Power Compa= ny have been extended into an unscheduled third day an Indian banking exec= utive involved in the negotiations said Saturday.=20 The two-day closed-door meeting - originally scheduled to wrap up Friday - = is focusing on two potential buyers of Houston-based Enron's 65 percent sta= ke in the power company. Tata Power Co. and BSES Ltd. - two of India's largest private power compani= es - are the only contenders vying to buy Enron's stake in Dabhol.=20 Talks will carry on today (Saturday) said A.K. Doda executive director = of the Industrial Development Bank of India. It's going to take a little m= ore time.=20 Senior Indian banking sources told Dow Jones Newswire that the talks are i= ntense but positive with negotiations continuing past midnight local t= ime.=20 Dabhol managing director K. Wade Cline officials from both prospective buy= ers and a consortium of Indian lenders to the Dabhol project are involved i= n the talks.=20 The Dabhol Power Company owns a 2184 megawatt power plant in the western I= ndian state of Maharashtra. The company is embroiled in a bitter power supp= ly dispute with the state government over allegedly unaffordable power ta= riffs.=20 Enron wants to sell its controlling equity stake in the dlrs 2.9 billion pr= oject due to payment defaults by the plant's sole customer - the Maharashtr= a State Electricity Board - and the Indian federal government's failure to = honor payment guarantees.=20 Dabhol is India's biggest-ever single foreign investment. The Maharashtra S= tate Electricity Board holds a 15 percent stake while General Electric Co.= and Bechtel Group Inc. own 10 percent each.=20 Domestic lenders have provided dlrs 1.4 billion of the project's total proj= ected cost of dlrs 2.9 billion.=20 Loans by foreign lenders including ABN Amro Bank of America Corp. and Cit= igroup Inc. are backed by government guarantees.=20 (dj/hp-ss) Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 All eyes in electric industry on Texas as deregulation nears By DAVID KOENIG AP Business Writer 11/10/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. DALLAS (AP) - Electric deregulation was a fabulous failure in California r= esulting in skyrocketing rates accusations of price-gouging and fears of w= idespread power blackouts.=20 The flop has made consumers elsewhere suspicious about giving up their regu= lated monopoly utilities for competition among power companies. Regulators and industry officials are turning their attention to Texas whe= re deregulation is scheduled to begin Jan. 1 after a rocky test program.=20 People are looking to Texas as the next iteration of retail competition. A= lot of states have pulled back after the California experience says Bret= t Perlman a member of the Public Utility Commission. If Texas is successf= ul Texas will become the model for the nation.=20 Ken Malloy president of a pro-deregulation think tank called the Center fo= r the Advancement of Energy Markets called Texas the state to watch.=20 California obviously created a domino effect leading other states to del= ay deregulation Malloy said. A lot of people are placing a lot of hope on= Texas.=20 Texas officials say that unlike California which must import much of its p= ower Texas imports little and has built more than 50 new power plants sinc= e 1995 providing an important cushion.=20 Texas also made it easier for power generators and resellers to negotiate l= ong-term contracts which officials say will help lock in lower prices. And= Texas provides more-digestible price information making it easier for con= sumers to comparison-shop they say.=20 California officials warn that Texans may be a little too smug.=20 They spot trouble already in Texas including California-style price spikes= in some spot markets for electricity - a clear sign they say that power = companies are learning how to maximize profits by forcing prices up.=20 There are things that can be done by people who own the power to create a = shortage and if they see an opportunity to make money doing that they will= said John Rozsa an aide to state Sen. Steve Peace who was heavily invo= lved in California's deregulation debate.=20 California officials accuse the power companies - many of them Texas-based = - of withholding supplies or clogging transmission lines to drive prices hi= gher. They say the same techniques could be used in Texas.=20 Supporters and opponents of deregulation do agree that the stakes will be h= igh in Texas for power companies and consumers.=20 If the wheels fall off it would be hard to put it back together says Bo= b Manning an executive with San Antonio-based H-E-B Grocery Co. which hop= es to cut its $40 million annual electricity bill through deregulation by a= t least 6 percent.=20 The idea behind electric deregulation is simple and powerful. Instead of fo= rcing residents and businesses to buy their power from a monopoly such as T= XU Electric or Reliant let them choose among several competing companies.= =20 In theory competition should cause prices to fall as it did for air trave= l and long-distance phone service. That's what the Texas Legislature though= t when it voted in 1999 to let utility customers pick a new power company b= eginning Jan. 1 2002.=20 Power traders led by Enron Corp. lobbied heavily for deregulation figuring= they could profit by gaining a chunk of the utilities' business even thoug= h Enron produces little power itself.=20 To prepare for deregulation the Legislature approved a seven-month pilot p= rogram in which a few commercial and residential customers would be able to= switch. Soon glaring problems emerged.=20 The trial program was delayed three times. When it finally began this summe= r the state's main power grid struggled to switch customers to their new p= ower company. Prices for backup power used on hot summer days temporarily j= umped 100-fold.=20 Through it all the Public Utility Commission and the power companies and t= heir allies have insisted the pilot program was serving its purpose of high= lighting potential problems.=20 Anytime you buy a new home there are a whole bunch of things you need to g= et fixed before you move in Perlman said this week. We're going down tha= t punch list and I think we'll be ready on Jan. 1.=20 The unresolved issues he said include how utilities such as TXU and Relia= nt will pass on the cost of fuel to their customers who were guaranteed a = 6 percent rate cut on Jan. 1.=20 In addition to the technical setbacks deregulation suffered a blow when Sh= ell Energy a unit of the Anglo-Dutch energy giant pulled out of Texas aft= er signing up 40000 customers. Suddenly one of the biggest players and a p= otent competitor to TXU and Reliant had vanished.=20 Shell has said that doing business in Texas became uneconomical after other= states delayed deregulation.=20 That was a bit bizarre because they had spent a lot of money to attract c= ustomers said Brian Lloyd a top PUC official on pricing issues. But if = they don't want to be here we don't want them.=20 Lloyd and other PUC officials are confident that as deregulation catches on= other power companies will move in to Texas ensuring strong competition.= =20 Already however deregulation will be delayed beyond Jan. 1 because of a l= ack of competition and questions about power-transmission in a section of s= outheast Texas served by Entergy Corp. and in a stretch of northeast Texas = served by Southwestern Electric Power Co.=20 Last month Consumers Union AARP and other groups asked the PUC to delay c= ompetition everywhere in Texas because of computer glitches and billing pro= blems during the pilot program.=20 Deregulation advocates worry that residential customers will simply stay wi= th their old electric utility causing new competitors to fail.=20 The PUC is likely to push ahead after receiving a final round of comments n= ext week from electric companies and officials of the main power grid call= ed the Electric Reliability Council of Texas or ERCOT.=20 Along with the power traders large commercial customers - like the H-E-B G= rocery chain - figure to be winners.=20 A grocery store is an energy hog Manning said. We have a lot of refrige= rators that run 24 hours a day 365 days a year. We help (the power compani= es') bottom line.=20 Perlman the PUC member predicted deregulation will start on time but said= that making it trouble-free was the most important goal to build consumer = confidence.=20 A year from now no one will remember whether the market opened on Jan. 1 = or Jan. 15 or March 15 he said.=20 End advance Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 Enron Says It's Too Soon to Quantify U.K. Job Cuts (Update1) 2001-11-10 07:24 (New York) Enron Says It's Too Soon to Quantify U.K. Job Cuts (Update1) (Adds detail on U.K. operations Dynegy transaction lenders from fifth paragraph.) London Nov. 10 (Bloomberg) -- Dynegy Inc.'s $23 billion acquisition of Enron Corp. is at too early a stage for either company to know how many U.K. jobs will be eliminated an Enron spokesman said after a newspaper reported 4000 are at risk. Dynegy's acquisition of the biggest energy trader announced yesterday ``is still a long way off from closing'' said Enron spokesman Alex Parsons. ``It's too early to know what the impact will be on U.K. jobs'' he said. The Daily Mail newspaper which didn't cite sources said today that 4000 jobs are at risk mainly at Enron's Wessex water unit in southwest England two power plants on Teeside in northeast England and at its energy trading operation. It employs 5400 people in Europe mostly in the U.K. said Parsons. Dynegy said yesterday it would save as much as $500 million a year by ``winding down'' Enron's business outside of trading and pipelines and cutting costs. Enron decided to sell after its shares plunged 90 percent this year amid investors' concerns about the accuracy of its financial statements. The company had said in October it planned to eliminate as many as 500 jobs in Europe or almost as much as 10 percent of the workforce there to reduce costs. Offset Risk The company which owns generation in the U.K. to offset risk in its power trading operations said in August two workers died and two others were seriously injured in an explosion and fire at Teeside power station which it operates and partly owns. Enron owns Wessex Water as part of its Azurix water unit. It spent $2.8 billion in 1998 for Wessex from which Azurix emerged. Enron sold Azurix shares to the public in 1999 and then bought back the company this year after the unit failed in its strategy of buying up water companies and winning large projects. In August Enron agreed to sell Azurix's North American business to American Water Works Inc. for $150 million. The Dynegy transaction is expected to close in 2002's third quarter. The new company will have $90 billion in assets Dynegy said. Dynegy's stockholders including ChevronTexaco will have 64 percent of the new company. Enron's holders will own the rest. The merger will face opposition from consumer groups especially in California where energy traders such as Dynegy and Enron were blamed for soaring electricity prices that left the state's biggest utility bankrupt and the second-largest fighting for a government bailout. Other companies may yet be caught in the fallout from Enron's situation. Royal Bank of Scotland Group Plc is a lender to Enron the Guardian newspaper reported today without citing sources. It's unclear how much the U.K.'s No. 3 bank by assets lent Enron though it may be as high as several million pounds the paper said. It's not clear if the loans are secured it said. Royal Bank was involved in setting up a credit facility for Enron the newspaper said adding this helped push down the company's share price by 2.6 percent yesterday. --Mathieu Robbins in the London newsroom (+44 20) 7673 2097 Dynegy to Buy Enron for $23 Billion in Stock Debt (Update9) 2001-11-09 23:23 (New York) Dynegy to Buy Enron for $23 Billion in Stock Debt (Update9) (Adds advisers in last paragraph.) Houston Nov. 9 (Bloomberg) -- Dynegy Inc. agreed to buy Enron Corp. for at least $23 billion in stock and assumed debt ending a financial crisis that threatened to bankrupt Enron and disrupt U.S. power and natural-gas markets. Investors will get 0.2685 of a Dynegy share for each Enron share or $10.41 based on Dynegy's closing price today. The stock portion of the transaction is valued at $8 billion to $9 billion Dynegy Chief Financial Officer Robert Doty said. Dynegy said it will assume about $15 billion in Enron debt. Enron the largest energy trader decided to sell after its shares plunged 90 percent this year and a federal investigation of accounting irregularities limited its ability to finance operations. Enron's collapse would have caused upheaval in energy markets where the company does one-quarter of all gas and power trades traders say. ``Without someone stepping in to play the role Enron plays people (would) have a difficult time executing transactions'' said Daniel Gordon president of Allegheny Energy Inc.'s trading unit. ChevronTexaco Corp. the second-biggest U.S. oil company and owner of 26 percent of Dynegy will provide Enron with $1.5 billion immediately. ChevronTexaco will give Dynegy $1 billion after the merger closes. Dynegy Chief Executive Officer Charles Watson who led a company that has put as much emphasis on building power plants as on energy trading will take over a larger rival that Chairman and CEO Kenneth Lay had focused on trading. Earnings Reduced Lay's strategy boosted Enron's reported revenue to $100.7 billion in 2000 almost four times Dynegy's and more than 20 times what Enron generated in 1995. At its peak in December 2000 Enron stock was valued at more than $69 billion. In recent months Enron shares plummeted as investors began to question the accuracy of Enron's financial statements saying it was unclear whether the company was using affiliated partnerships to move debt off its books and hide losses. Yesterday the company restated its earnings for the past four years lowering them by more than $500 million to include losses from partnerships it once kept off its books. After the merger announcement Standard & Poor's Investors Service said it may lower Dynegy's debt rating. It cut Enron's to ``BBB-'' one notch above junk. Watson Dynegy President Stephen Bergstrom and CFO Doty will keep their positions at the combined company. Greg Whalley the president and chief operating officer of Enron will be an executive vice president. Lay said he won't be an active manager in the new company. Lay has not discussed a severance package with him Watson said. $200 Billion in Revenue Dynegy said it will have annual revenue of more than $200 billion more than 22000 megawatts of electric generating capacity and 25000 miles of pipeline after the merger. The company will save as much as $500 million a year by ``winding down'' Enron's business outside of trading and pipelines and cutting costs Dynegy said. The announcement of the merger came after the close of stock market trading though the two companies had acknowledged they were in talks. Shares of Dynegy rose $2.26 or 6 percent to $38.76. Enron rose 22 cents to $8.63. ChevronTexaco rose $1.90 to $89.49. Enron's 6.4 percent bonds which mature in 2006 jumped to about 76 cents on the dollar up from 69 cents traders said. The combination is expected to be ``strongly accretive'' to earnings Dynegy said. It projected earnings of $3.40 to $3.50 a share next year. It had been expected to earn $2.57 the average estimate of analysts surveyed by Thomson Financial/First Call. Third Quarter Closing The transaction is expected to close in 2002's third quarter. The new company will have $90 billion in assets Dynegy said. Dynegy's stockholders including ChevronTexaco will have 64 percent of the new company. Enron's holders will own the rest. ``Dynegy is taking out a competitor acquiring some attractive assets and they're doing it at an incredible price'' said Joseph Correnti an analyst at Wayne Hummer Investments who doesn't own shares of either company. Enron will pay a $350 million breakup fee if the transaction collapses. The two Houston-based companies began negotiations a week ago as it became apparent that Enron needed cash to stay in business. Watson said he approached Lay. ``I simply called Ken to see if there was anything we could do to straighten'' out rumors of a cash crunch at Enron Watson said. ``That next Saturday Ken was gracious enough to invite me over to his home.'' Dynegy agreed to the terms after Moody's Investors Service maintained an investment grade rating on Enron today eliminating a stumbling block in negotiations. Cash Crunch Moody's announcement removed the threat that a junk rating would force Enron to repay early $3.3 billion in bonds. Enron has been battling a cash crunch and a loss of investor confidence because of questions about partnerships started by its senior executives. Enron fired Chief Financial Officer Andrew Fastow in October as a Securities and Exchange Commission investigation focused in on partnerships he headed and helped create. Enron estimated Fastow made $30 million through partnerships affiliated with the company. The SEC began the investigation after Enron reduced third- quarter earnings by more than $1 billion and said dealings with two partnerships had lowered shareholder equity by $1.2 billion. ``Clearly (the partnerships) created quite a perception problem for the company and maybe more serious problems than that'' Lay said on a conference call after the buyout announcement. ``We'll see over time.'' California Opposition The merger will face opposition from consumer groups especially in California where energy traders such as Dynegy and Enron were blamed for soaring electricity prices that left the state's biggest utility bankrupt and the second-largest fighting for a government bailout. ``We will petition the state attorney general and federal authorities to block this merger'' said Doug Heller of the California-based Foundation for Taxpayer and Consumer Rights. ``This would further tighten the grip that the unregulated power industry has over California and it's the grip of the energy cartel that has choked California for the last year and a half.'' Energy trading markets ``are relatively fragmented'' so there should be no antitrust problems even though Enron and Dynegy are big companies said Robert Burka a Washington-based antitrust attorney with Foley & Lardner. ``Enron may well not be a healthy company going forward'' if the merger isn't approved Burka said. EnronOnline The combination of the two companies will leave Watson with control of EnronOnline an Internet energy and commodities trading site that has done more than $880 billion in trades since it was created in November 1999. ``It's not perfectly capturing the value of Enron but if you're on the board at Enron at this point you take it and move on'' said Correnti of Wayne Hummer Investments. The total value of the stock portion of the transaction could rise depending how many Enron shares need to be converted in the stock swap. An Enron spokesman said the company had 913 million shares on a fully diluted basis though a person familiar with the talks said Enron's stock price is so low that many common share equivalents won't be converted leaving the number at 743 million shares. Lehman Brothers Inc. is Dynegy's financial adviser on the transaction. Salomon Smith Barney Inc. and J.P. Morgan & Co. are advising Enron. --Margot Habiby in Houston (713) 353-4872 Dynegy announces $8 billion deal to buy larger rival Enron By JUAN A. LOZANO Associated Press Writer 11/09/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. HOUSTON (AP) - Energy marketer Dynegy Inc. announced Friday that it will bu= y its much larger rival the once mighty but now troubled Enron Corp. for = $8 billion in stock. Dynegy also will assume a hefty $15 billion in Enron d= ebt.=20 The announcement came after Enron's stock price plummeted about 80 percent = over the past three weeks because of concerns that the company wasn't revea= ling serious financial problems to shareholders. Under the deal ChevronTexaco Corp. which owns more than a quarter of Dyne= gy would quickly provide about $1.5 billion. ChevronTexaco also would cont= ribute an additional $1 billion upon completion of the deal the companies = said.=20 With its market-making capabilities earnings power and proven strategic a= pproach to wholesale markets Enron is the ideal strategic partner for Dyne= gy Dynegy chairman and chief executive officer Chuck Watson said in annou= ncing the purchase.=20 Watson made it clear that he would not tolerate the sort of financial pract= ices that prompted explosive disclosures by Enron this week - including an = admission that more than half a billion dollars in debt had been kept off t= he company's books.=20 As a combined company we will focus on leveraging our core skill sets and= as always we will keep a strong balance sheet and straightforward financ= ial structure as key priorities Watson said.=20 Enron is the country's top buyer and seller of natural gas and the No. 1 w= holesale power marketer. The company operates a 25000-mile gas pipeline sy= stem and also markets and trades metals paper coal chemicals and fiber= -optic bandwidth.=20 Dynegy controls nearly 15000 megawatts of power generating capacity throug= h investments in power projects and sells the energy in wholesale markets = and through utilities.=20 At a news conference Watson said company officials who negotiated the deal= came away convinced that Enron was worth buying despite its recent trouble= s.=20 We looked under the hood and guess what it's just as strong as we though= t it was Watson said.=20 Under the terms of the deal Enron shareholders will receive .2685 Dynegy s= hare for each share of Enron common stock valuing each Enron share at $10.= 41. Enron has about 775 million common shares said spokeswoman Karen Denne= .=20 That represents a 21 percent premium above Enron's closing price of $8.63 F= riday on the New York Stock Exchange - but still just a fraction of their 5= 2-week high of $84.87. Dynegy's shares climbed $2.26 or 6 percent to clos= e at $38.76 on the NYSE.=20 In after hours trading on the NYSE Enron shares shot up 15.6 percent or $= 1.35 to $9.98. Dynegy shares were unchanged.=20 Dynegy's stockholders will own approximately 64 percent of the new company= with Enron's stockholders holding the remainder.=20 The boards of both companies have unanimously approved the transaction whi= ch is expected to close next summer. The deal is expected to save the combi= ned company between $400 and $500 million annually because of continued eli= mination of non-core Enron holdings and lower operating costs. Watson sai= d it was too soon to say if the deal would result in job cuts. Enron has ab= out 20000 employees while Dynegy's work force is about 6000.=20 Watson will remain as chairman and chief executive of the combined company= which will retain the Dynegy Inc. name. Dynegy's Steve Bergstrom will cont= inue as president.=20 Enron chairman and chief executive Kenneth L. Lay will no longer have a rol= e in day-to-day management of the company but has been offered a seat on t= he combined company's board and will help shepherd the merger through.=20 Dynegy said that Greg Whalley the current president and chief operating of= ficer of Enron will become an executive vice president of the new Dynegy. = He said the merger sets the best course for Enron.=20 Few of the options we considered for our core business going forward provi= ded us with the earning potential and immediate synergies that a merger wit= h Dynegy could deliver Whalley said. Together with Enron's recently anno= unced bank commitments this cash infusion gives Enron immediate liquidity= which we believe will enable the company to maintain its investment grade = credit rating.=20 The merger was announced a day after Enron acknowledged it overstated earni= ngs by about 20 percent over the past four years and kept large amounts of = debt off its balance sheets through business partnerships now under investi= gation by the Securities and Exchange Commission.=20 Analysts said the merger rescues Enron but leaves Dynegy in uncharted terr= itory - with the outcome of the SEC investigation completely unknown. Ther= e is still a shroud hanging over Enron that now moves over to Dynegy said= Carol Coale an analyst with Prudential Securities.=20 Early Friday Moody's Investors Service downgraded Enron's debt ratings to = one level above junk bond status and said the company's long-term debt rati= ngs remain under review for further downgrade.=20 In an SEC filing Enron said financial statements from 1997 through the fir= st half of 2001 should not be relied upon and that outside businesses run= by Enron officials during that period should have been included in the com= pany's earnings reports.=20 The revised statements reduced Enron's profits for those years by $586 mill= ion from $2.89 billion to $2.31 billion. The revisions also increased the = company's debt each of the four years reaching $10.86 billion - $628 milli= on more than previously reported - by the end of 2000.=20 Keeping the debt off its balance sheets likely ensured Enron could maintain= a strong credit rating to support expansion of its core businesses - whole= sale trading of natural gas and electricity.=20 But the company's stock price started dropping 10 months ago when its high-= speed Internet unit foundered and Enron had trouble collecting money from p= ower customers in India.=20 The stock price began to free fall after Enron announced a $618 million thi= rd quarter loss and news of the SEC investigation surfaced.=20 Enron responded by firing its chief financial officer and scrambled to get = cash and increase credit lines in an attempt to regain investor confidence= but investors dumped Enron shares and sent its stock plummeting.=20 The ousted chief financial officer Andrew Fastow ran some of the partners= hips under investigation by the SEC.=20 Jeff Skilling Enron's former chief executive who left in August has been = called to testify before the SEC although it's unclear when.=20 ---=20 On the Net:=20 http://www.enron.com=20 http://www.dynegy.com AP Graphic DYNEGY ENRON=20 Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 USA: UPDATE 3-Dynegy to acquire Enron for $9 bln. 11/09/2001 Reuters English News Service (C) Reuters Limited 2001. (Adds new material from news conference new analyst comments)=20 By Andrew Kelly HOUSTON Nov. 9 (Reuters) - Dynegy Inc. agreed on Friday to acquire rival E= nron Corp. for some $9 billion in stock underlining the dramatic reversal = of fortunes for the Houston-based energy trading giant that was valued last= year at nearly $80 billion.=20 Enron's stock fell sharply in the past month due to investors' concerns abo= ut murky transactions that sparked an investigation by U.S. regulators and = damaging downgrades by credit rating agencies.=20 It's an unbelievable ending to an unbelievable story said Fulcrum Global= Partners analyst Michael Barbis. The company that created the industry is= gone - it's all Dynegy now.=20 The merged company will retain the Dynegy name. It will have annual revenue= s of more than $200 billion and assets worth $90 billion including more th= an 22000 megawatts of electricity generating capacity and 25000 miles of = natural gas pipelines.=20 It will be North America's biggest marketer and trader of natural gas and e= lectricity positions previously held by Enron.=20 Dynegy will control the new 14-member board holding 11 of its seats and t= he top executive positions.=20 ChevronTexaco Corp. a 26.5 percent stakeholder in Dynegy will provide an= immediate infusion of $1.5 billion to keep Enron's core trading operations= afloat and a further $1 billion when the deal closes. It will get three bo= ard seats.=20 DYNEGY'S WATSON FIRMLY IN CONTROL=20 The deal puts Chuck Watson Dynegy's pioneering chairman and chief executiv= e who has long labored under Enron's shadow firmly in charge of the new co= mpany.=20 It is a great deal for Dynegy and under the circumstances as a good of a= deal as Enron could get said UBS Warburg analyst Ron Barone.=20 Watson will remain chairman and chief executive of the merged company whil= e Dynegy's president Steve Bergstrom and chief financial officer Rob Dot= y will retain those positions.=20 Greg Whalley president and chief operating officer of Enron will become a= n executive vice president and will join Watson Bergstrom and Doty in the = Office of the Chairman.=20 Barbis said that after Enron saw its stock fall 75 percent over the last mo= nth cutting its market capitalization by $19 billion the company was left= in a weak negotiating position. At the end of the day they had no choice= he said.=20 Dynegy will swap 0.2685 shares of its own stock for each Enron share valui= ng Houston-based Enron at $10.41 per share a premium of 21 percent over Fr= iday's closing price of $8.63.=20 The price is far below a lofty high of $90.56 set on Aug. 23 2000 when En= ron was riding a wave of investor enthusiasm.=20 Dynegy stockholders will own about 64 percent and Enron stockholders will o= wn about 36 percent of the merged company.=20 REGULATORS PROBE ENRON DEALS=20 Enron had been struggling to overcome a plummeting stock price and credit r= atings in the past month following disclosures of off-balance sheet deals n= ow under investigation by the U.S. Securities and Exchange Commission.=20 Enron chairman and chief executive Ken Lay told a news conference in Housto= n that he would have preferred Enron to retain its independence but that th= is had become impossible in the face of a consistent barrage of really neg= ative articles.=20 The last three weeks haven't been a whole lot of fun said Lay adding th= at he had not yet decided whether to take up Watson's offer of a seat on th= e merged company's board.=20 Watson said the agreement with Enron includes escape clauses that would a= llow Dynegy to back out of the deal if any further undisclosed problems wer= e to emerge but he said he was confident that this would not happen.=20 You know we looked under the hood and guess what? It's just as strong as = we though it was he said.=20 Watson said he did not expect the merger to run into serious regulatory obs= tacles.=20 Regulatory agencies realize that a speedy resolution is important to keep = stability in the U.S. energy market. This has got to be resolved said UBS= Warburg analyst Barone.=20 Dynegy said it expects the new company to earn $3.40 to $3.50 per share in = 2002 an increase of 35 percent or 90 cents to 95 cents per share for cur= rent Dynegy shareholders before taking into account expected synergies and= cost savings.=20 Dynegy estimates annual pretax savings of $400 million to $500 million as a= result of the sale or winding down of non-core businesses in the Enron por= tfolio and other measures.=20 Watson said he did not yet know how many jobs might be cut as a result of c= ombining the two companies.=20 The merger still requires approval by regulators and both sets of sharehold= ers but is expected to close by the end of the third quarter of 2002.=20 Lehman Brothers was financial advisor to Dynegy. J.P. Morgan Chase and Salo= mon Smith Barney a unit of Citigroup were financial advisors to Enron. Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 Enron not California's largest power supplier but merger could affect pric= es By KAREN GAUDETTE Associated Press Writer 11/09/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. SAN FRANCISCO (AP) - When Houston-based Dynegy Inc. announced Friday that i= t had bought Enron its larger rival for $7.8 billion shares of stock some= energy traders predicted fluctuating power prices in the coming months thr= oughout the West as the market settles into a new hierarchy with one fewer = provider.=20 The fragility of the system is such that a small perturbation can turn eve= rything upside down very easily said Gary Ackerman executive director of= the Western Power Trading Forum of which Enron is a member. A week ago I= don't think many people would have even contemplated this. The loss of Houston-based Enron will make prices more jumpy and more uncer= tain and it's going to take the market some time to calm down Ackerman sa= id. Should the Northwest have a chilly winter prices could spike with fewe= r sellers in the market he said.=20 And that in turn could affect California's pocketbook though the state buy= s a negligible amount of electricity from Enron said Oscar Hidalgo spokes= man for the state Department of Water Resources which buys electricity for= the customers of two financially ailing utilities. Hidalgo said the state = had a long-term contract with Enron earlier this year though the marketer o= pted out of it after a month.=20 They have indicated to us that we were somewhat of a credit risk for them= like many generators at the time Hidalgo said.=20 Earlier this year Enron attempted to cancel its contract as electricity an= d natural gas provider to California's two public university systems which= spent more than $170 million combined last year on the fuels. It was uncle= ar Friday what would happen to those contracts.=20 Enron's reach in California goes beyond keeping the lights on.=20 The state's retirement pension fund owns 3 million shares of Enron stock - = about 1 percent of its total investments - said CalPERS spokeswoman Pat Mac= ht. The CalPERS board will meet next week to discuss the situation she sai= d.=20 I can only say at this point that we were as surprised and shocked as the = rest of the world was about what has been going on there and we're assessin= g our options Macht said.=20 Enron Corp.'s outspoken support for deregulation of the country's electrici= ty markets sparked resentment in California as rolling blackouts swept thro= ugh earlier this year although the energy marketer is not one of Californi= a's largest power providers.=20 Some felt the financial downfall of the nation's top buyer and seller of na= tural gas and major electricity seller was justified.=20 The principles of karma seem to be working here said Harvey Rosenfield = founder of the Santa Monica Calif.-based consumer advocacy group the Found= ation for Taxpayer and Consumer Rights. Here Enron was one of the chief pr= oponents of deregulation and took advantage of it and benefitted enormously= and now is reaping the consequences.=20 Earlier this year California Attorney General Bill Lockyer subpoenaed Enro= n's electricity trading records as he sought to prove the state was the vic= tim of price gouging which led officials to spend more than $9 billion buyi= ng electricity for the customers of two financially troubled utilities. Enr= on repeatedly denied all accusations of market manipulation.=20 Enron the nation's top buyer and seller of natural gas and the top wholesa= le marketer in the United States had become one of the nation's 10 largest= companies recording revenue of $100.8 billion in 2000. Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 Dynegy-Enron merger could mean name change for Enron Field By KRISTEN HAYS Associated Press Writer 11/09/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. HOUSTON (AP) - The Houston Astros' stadium won't be nicknamed Home Run Fie= ld much longer.=20 Houston-based energy marketer Dynegy Inc. announced Friday that it will buy= Enron Corp. the $100 million namesake of the Astros' ballpark. The compan= ies will operate independently until the deal closes possibly next summer. The new company will keep Dynegy's name and lose Enron's - and Houston's $2= 51 million ballpark could see the same change Astros owner Drayton McLane = Jr. said.=20 McLane said the team's 30-year naming rights agreement with Enron allows an= other company to give the ballpark a new name in case of a merger. The Astr= os have the right to approve or reject a change.=20 We want to work with (Dynegy chairman and chief executive) Chuck Watson an= d we look forward to working with Dynegy McLane said.=20 Watson said the ballpark name wasn't an issue as the companies hammered out= the merger agreement this week.=20 Quite honestly it has not come up Watson said Friday. This is about tw= o strong companies going forward. It is something we will have to deal with= in the months coming up.=20 Since opening before the 2000 season Enron Field has become known as one o= f the best parks for hitters in the majors. There have been 496 homers hit = in Enron the past two years 19 percent more than in Astros road games.=20 Coincidentally Houston's other company-named sports facility also is in qu= estion. The corporate namesake of the Compaq Center basketball/hockey arena= Compaq Computer Corp. is being bought by Hewlett-Packard Co.=20 Enron Field wouldn't be the first venue to change names because of a merger= or other corporate decision by the naming-rights owner.=20 CoreStates Arena home to the Philadelphia 76ers and the Philadelphia Flyer= s became First Union Arena when First Union Corp. acquired CoreStates Fina= ncial Corp. in 1998.=20 Marine Midland Arena in Buffalo N.Y. became HSBC Arena last year because = Marine Midland in 1999 changed its name to HSBC Bank USA as part of a globa= l branding strategy.=20 Such changes are inevitable when 61 major league sports facilities bear cor= porate names in an age of many mergers and acquisitions said Dean Bonham o= f the Bonham Group in Denver a sports and entertainment marketing firm.=20 Mergers and acquisitions had no effect on the sports industry just 10 year= s ago he said. Today they can have a significant affect on the community= beyond the direct impact on the company itself.=20 Enron chairman and chief executive Ken Lay who said Friday he had been inv= ited to serve on the new company's board of directors helped create Enron = Field before buying its name.=20 By 1996 McLane had determined it was time to move from the once-futuristic = though aging Astrodome and threatened to sell part of the team and move to= Virginia unless a new ballpark was built in Houston.=20 That year Lay put together a consortium that provided a $34.7 million no-in= terest loan to buy the land in downtown Houston and subsidize the 42000-se= at ballpark's construction costs.=20 Enron also manages the ballpark's mechanical and electrical equipment and e= nergy services which officials said would earn up to $200 million over 30 y= ears. McLane said Dynegy likely would continue that deal. Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 Dynegy Buy Of Enron Valued At $23B-$24B With Debt By Michael Rieke and Erwin Seba Of DOW JONES NEWSWIRES 11/09/2001 Dow Jones News Service (Copyright (c) 2001 Dow Jones & Company Inc.) HOUSTON -(Dow Jones)- Asked what kind of bargain Dynegy Inc. (DYN) got in b= uying Enron Corp. (ENE) Enron Chairman and Chief Executive Ken Lay said to= ld a Friday evening press conference A big one.=20 Dynegy will convert 850 million shares of Enron stock to its own shares in = a deal valued at $23 billion-$24 billion with assumption of debt. Dynegy Chairman Chuck Watson told the media that the deal wasn't something = that was stitched together in the last two weeks.=20 Watson had called Lay on Oct. 24 to tell him that Dynegy didn't have any qu= alms about being a counterparty in energy deals with Enron and to ask if th= ere was anything Dynegy could do to help.=20 At the time Enron's share price was under pressure due transactions it had= done with its former chief financial officer Andrew Fastow. The company ha= d just taken a $1.2 billion reduction in shareholder equity when it closed = out transactions and the Securities and Exchange Commission had just launch= ed an investigation of the deals.=20 The next Saturday Lay invited Watson to his home and they started discussin= g a merger Watson said.=20 Three or four weeks ago he didn't expect such a transaction to occur Lay s= aid. But he began to realize that Enron needed to strengthen its balance sh= eet quickly improve liquidity and focus on its core businesses.=20 Enron was in control of its destiny until the merger was done Lay said. En= ron could have stayed independent and revitalized the balance sheet with pr= ivate investments but Dynegy was showing interest in a merger.=20 As we looked at the alternatives it fairly quickly became apparent to us = to do this deal with Dynegy was the best option he said.=20 Enron looked at the shareholder lawsuits filed against the company and at t= he exposure from the SEC investigation he said. It then determined a worst= -case scenario which was then built into the economics of the deal.=20 Neither Watson nor Lay wanted to get into specifics involving the transacti= ons Enron done with the partnerships run by Fastow. Enron will discuss thos= e deals more thoroughly in a conference call in the middle of next week.=20 In explaining his company's demise Lay blamed a series of negative news st= ories combined with management's ignorance of the facts concerning the par= tnership transactions.=20 You can always second-guess everything but it has been a fairly consisten= t barrage of really negative articles that's been very tough to beat...back= he said.=20 Due diligence for the deal was relatively easy to do because the two compan= ies already knew each other so well said Watson. The two Houston-based com= panies have been competing in the energy business for about 15 years.=20 After examining Enron's books and businesses it became clear the value de= gradation in Enron had nothing to do with the core businesses said Watson= .=20 Watson said it is too soon to think about the possibility of layoffs result= ing from the merger. Enron has more than 7000 employees in Houston compare= d with 1600 Dynegy employees. Worldwide Enron has 20000 employees and Dyn= egy has 6000 employees.=20 Watson has asked Lay to join Dynegy's board of directors. Lay said he would= decide whether to accept that spot as the deal gets close to closing.=20 Watson doesn't expect any regulatory problems associated with the merger. T= he deal must be approved by regulators in the U.S. and in Europe where bot= h companies have operations. Regulatory approval should take six to nine mo= nths.=20 There is an escape clause in the merger deal. Dynegy will get $350 million = if the deal falls apart.=20 Although the combined companies will be a huge player in the energy busines= s Watson doesn't expect regulators to require any sale of assets.=20 Enron will go ahead with its plans to sell $4 billion in assets. It has a d= eal to sell its electric utility Portland General Electric for $3 billion= including assumption of debt. The deal with Northwest Natural Gas Co. (NWN= ) will include $1.55 billion in cash $200 million in Northwest Natural pre= ferred stock and $50 million in common stock.=20 Enron is also planning to sell another $850 million-$900 million in foreign= assets.=20 Each company will continue to operate its own electronic energy trading pla= tform. Enron operates EnronOnline and Dynegy operates DynegyDirect.=20 EnronOnline is the most successful online business doing $3 billion-$4 bil= lion a day in energy transactions in the last 30 days.=20 Dynegy started its online trading platform last year. It did $10 billion of= business in the third quarter of this year.=20 This is a financial bonanza for both companies Watson said. This is goo= d for Dynegy. This is good for Enron. It's also good for our employees and = it's good for our stockholders.=20 -By Michael Rieke Dow Jones Newswires 713-547-9207 [email protected]= and Erwin Seba 713-547-9214 [email protected] Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 Chronology of Enron Corp.'s history 11/09/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. HOUSTON (AP) - A look at the history of Enron Corp.:=20 July 1985 - Houston Natural Gas merges with InterNorth a natural gas compa= ny based in Omaha Neb. to form the modern-day Enron an interstate and in= trastate natural gas pipeline company with approximately 37000 miles of pi= pe. 1989 - Enron begins trading natural gas commodities. Over the years the co= mpany becomes the largest natural gas merchant in North America and the Uni= ted Kingdom.=20 June 1994 - Enron North America trades its first electron. Enron goes on to= become the largest marketer of electricity in the U.S.=20 January 1997 - Enron unveils a new logo and its first global advertising ca= mpaign. The company also acquires Zond Corp. a leading developer of wind e= nergy power. The acquisition results in the formation of Enron Renewable En= ergy Corp.=20 August 1997 - Enron announces its first commodity transaction using weather= derivative products. Enron goes on to market coal pulp paper plastics = metals and bandwidth.=20 April 1999 - Enron agrees to pay $100 million over 30 years for the naming = rights to Houston's new ballpark Enron Field. The Astros also sign a 30-ye= ar facilities management contract Enron Energy Services.=20 June 1999 - Enron Energy Services transacts its first billion-dollar deal w= ith Suiza Foods.=20 November 1999 - Enron launches EnronOnline the first global Web-based comm= odity trading site.=20 January 2000 - In a Fortune survey Enron was named The Most Innovative Co= mpany in America for the fifth consecutive year and is ranked No. 24 among= the 100 Best Companies to Work for in America.=20 March 2000 - The Energy Financial Group ranks Enron the 6th largest energy = company in the world.=20 May 2000 - Enron and strategic investors IBM and America Online launch Th= e New Power Company the first national energy service provider for residen= tial and small businesses in deregulated U.S. energy markets.=20 August 2001 - Enron chief executive officer Jeff Skilling resigns after run= ning the company for just six months. Chairman and former CEO Ken Lay resum= es his position atop Enron.=20 October 16 2001 - Enron reports a $638 million third-quarter loss and disc= loses a $1.2 billion reduction in shareholder equity partly related to par= tnerships run by chief financial officer Andrew Fastow.=20 Oct. 22 2001 - Enron acknowledges Securities and Exchange Commission inqui= ry into a possible conflict of interest related to the company's dealings w= ith those partnerships.=20 Oct. 24 2001 - Enron ousts Fastow.=20 Oct. 27 2001 - Enron taps into more than $3 billion in credit in an effort= to boost confidence of investors and customers.=20 Oct. 31 2001 - Enron announces the SEC inquiry has been upgraded to a form= al investigation. Enron creates special committee headed by University of T= exas law school dean William Powers to respond to the investigation.=20 Nov. 1 2001 - Enron secures $1 billion in new financing using its natural= gas and pipeline assets as collateral.=20 Nov. 6 2001 - Enron's stock price drops below $10 a share - down from a 52= -week high of $84.87 on Dec. 28 2000 - after reports the financially troub= led energy trader was seeking additional financing to shore up confidence.= =20 Nov. 8 2001 - Enron files documents with SEC revising its financial statem= ents for past five years to account for $586 million in losses.=20 Nov. 9 2001 - Dynegy Inc. announces an agreement to buy its much larger ri= val Enron for $7.8 billion in stock. Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 Fitch Takes Rating Action on Enron & Dynegy on Merger News 11/09/2001 Business Wire (Copyright (c) 2001 Business Wire) NEW YORK--(BUSINESS WIRE)--Nov. 9 2001--Fitch revises the Rating Watch on = Enron Corp.'s outstanding securities to Evolving from Negative where they w= ere placed on Oct. 25 2001.=20 A Rating Watch Evolving means the ratings may be raised lowered or mainta= ined. In addition the long-term credit ratings of Dynegy Inc. (DYN) and Dy= negy Holdings Inc. (DYNH) are placed on Rating Watch Negative. A Rating Wat= ch Negative means that the ratings may be lowered or affirmed. The outstand= ing `F2' rated commercial paper programs for DYN and DYNH are not affected. The rating actions follow Dynegy's announcement that it has reached a defin= itive agreement to acquire Enron Corp. in a stock-for-stock transaction und= er which Enron shareholders will receive a fixed amount of DYN shares. Fitc= h does not anticipate the rating of the combined company dropping below the= mid-`BBB' range based on its preliminary assessment.=20 The transaction carries significant financial support from ChevronTexaco Co= rp. (CVX) a 27% stakeholder in DYN which has committed to provide up to $= 2.5 billion of new equity to DYN. The CVX equity commitment includes a $1.5= billion cash injection to occur over the next several days which in turn = will immediately be contributed by DYN to Enron to provide interim liquidit= y support. This upfront capital contribution will be structured as a prefer= red stock investment with an option to buy 100% of the common stock in Nort= hern Natural Gas Co. (NNG). The remaining $1.0 billion of equity will be fu= nded at closing. In addition CVX has options to contribute up to $1 billio= n of additional equity at specified amounts and retains its rights to maint= ain its current economic interest in the merged entity. The transaction is = expected to close within six to nine months and will require several regula= tory approvals including the Securities and Exchange Commission (SEC) Fed= eral Energy Regulatory Commission (FERC) and Hart-Scott Rodino.=20 Fitch is revising its Rating Watch on Enron's outstanding debt securities t= o Evolving based on conditions of the transaction which address several maj= or concerns the most time sensitive being liquidity. The $1.5 billion equi= ty infusion improves Enron's liquidity position which now appears adequate= to fund Enron's cash needs through the first quarter of 2002 under expecte= d business conditions. However Enron faces significant refinancing risk. E= nron's fully drawn $1.75 billion 364-day committed bank credit facility is = up for renewal in April 2002 and the $2.4 billion of outstanding Osprey Tru= st notes are expected to be repaid by mid-2002. Relating to Osprey Fitch e= stimates that trust asset sale proceeds will not be adequate to fully fund = maturing Osprey debt. Therefore Enron will potentially need to provide mor= e than $500 million to pay off the notes. Fitch will closely monitor Enron'= s cash position through the merger period.=20 Fitch anticipates that the surviving company's rating would move to the mid= -`BBB' range assuming the successful execution of its interim plans to dele= verage its capital structure and the completion of the merger. If the merge= r were to terminate Fitch believes Enron's ability to manage its business = would be severely impaired and would expect to downgrade its securities to = highly speculative grade. Termination provisions to the merger agreement ad= d an element of uncertainty to completing the merger. If the transaction we= re terminated DYN would have the option to own NNG removing both a valuab= le property and stable cash flow source from Enron's credit profile.=20 The Rating Watch Negative status for DYN and DYNH reflects some uncertainty= over the ultimate outcome of its post-merger credit profile. While the pro= posed transaction structure will not require incremental debt financing DY= N will likely assume many of the difficulties which continue to plague Enro= n including the need to sell underperforming emerging market assets the on= going SEC investigations of certain Enron sponsored partnerships and poten= tial litigation arising from several shareholder suits filed against Enron.= While Enron management is actively working to reduce debt and exit problem= businesses it is possible that not all outstanding issues will be resolve= d within the transaction approval timeframe.=20 A positive consideration for DYN is the structure of the merger agreement w= hich contains a series of out provisions enabling it to terminate the merge= r upon occurrence of specific material adverse changes including Enron liti= gation exposure in excess of specified levels or a drop in Enron's senior u= nsecured credit rating below investment grade. In addition Dynegy's upfron= t capital contribution is protected by the underlying value of NNG. Based o= n these provisions Fitch would not expect to change Dynegy's current long-= term ratings in the event the transaction became unwound.=20 Other positives resulting from the merger include: improved management cred= ibility through Dynegy's assumption of senior executive positions and board= of directors control the reduction of leverage at the new company from Ch= evronTexaco's equity commitment the aggressive downsizing and exiting of n= on-core operations potential cost savings through the merger conservative= ly estimated at $500 million annually and the market strength of the merge= d company particularly as it relates to Enron's and Dynegy Holdings' North= American wholesale marketing and trading franchises.=20 The following ratings are impacted by today's rating action: Enron -- `BBB-' senior unsecured debt -- `BB' subordinated debt -- `B+' preferred stock -- `F3' commercial paper. Northern Natural Gas Co. Transwestern Pipeline Co. -- `BBB-' senior unsecured debt. Dynegy Inc. -- `BBB' implied senior unsecured debt rating. Dynegy Holdings Inc. -- outstanding `BBB+' senior notes. Dynegy Capital Trust I -- outstanding `BBB' trust preferred securities. CONTACT: Fitch New York Ralph Pellecchia 212/908-0586 Robert Grossman 21= 2/908-0535 Hugh Welton 212/908-0746=20 18:40 EST NOVEMBER 9 2001=20 Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 ChevronTexaco to Invest $2.5 Billion in Dynegy 11/09/2001 PR Newswire (Copyright (c) 2001 PR Newswire) Supports Dynegy's Merger with Enron=20 ChevronTexaco Holds Warrants to Increase Investment=20 SAN FRANCISCO Nov. 9 /PRNewswire/ -- ChevronTexaco Corp. (NYSE: CVX) today= announced that it has committed $2.5 billion of new equity in Dynegy Inc. = (NYSE: DYN) in support of Dynegy's planned merger with Enron (NYSE: ENE). ChevronTexaco which currently owns approximately 26 percent of Dynegy's ou= tstanding common stock immediately will invest $1.5 billion in convertible= preferred shares in Dynegy in order to fund Dynegy's equity infusion into = Enron. The $1 billion balance of ChevronTexaco's equity purchase of Dynegy = common stock would be made upon the closing of the Dynegy-Enron merger. The= se investments will be made at a significant discount to Dynegy's closing p= rice today.=20 Following the closing of the merger which is subject to regulatory reviews= and Enron and Dynegy shareholder approval ChevronTexaco would hold approx= imately 26 percent of Dynegy's outstanding common stock and would maintain= its three seats on the Dynegy Board of Directors.=20 Under terms of its agreement with Dynegy ChevronTexaco will be granted war= rants to purchase an additional $1.5 billion of Dynegy common stock over a = period of up to three years from the completion of the merger. Our equity = interest in Dynegy is highly complementary to our larger portfolio of asset= s and activities and reflects our strategy to participate in the growing e= nergy convergence marketplace including wholesale and retail marketing an= d trading of energy products and services said David J. O'Reilly chairma= n and chief executive officer of ChevronTexaco. Our relationship with Dyne= gy has proven to be highly beneficial for both companies and we are optimi= stic we will continue to see comparable or better performance in the future= .=20 This additional investment in Dynegy which is expected to be immediately = accretive to ChevronTexaco underscores our belief in the long-term value p= otential of this sector. We have additional upside through our warrants. We= have confidence in the Dynegy leadership team headed by Chuck Watson to = bring a disciplined management approach to this complex business and to bui= ld a larger and more profitable company through this merger. We are also ho= peful that the combination of Dynegy and Enron will restore market and cred= it confidence in this important energy sector O'Reilly continued.=20 In the event that the merger between Dynegy and Enron is not completed Che= vronTexaco can redeem its convertible preferred shares for $1.5 billion in = cash or convert to common shares. In the latter event ChevronTexaco would = own an approximate 36 percent equity interest in Dynegy.=20 We believe this expanded investment offers us an opportunity to create gre= ater value and provide significant upside potential for ChevronTexaco share= holders as Dynegy strengthens its leadership position in this sector O'Re= illy said. Through our membership on the Dynegy board we will continue ou= r active role in the strategic direction of the company.=20 Private Securities Litigation Reform Act Safe Harbor Statement=20 Except for the historical and present factual information contained herein= the matters set forth in this press release including statements as to th= e creation of greater value for stockholders expected benefits of the merg= er of Dynegy and Enron and other statements identified by words such as a= nticipates expects projects plans and similar expressions are fo= rward-looking statements within the meaning of the safe harbor provisions= of the Private Securities Litigation Reform Act of 1995. These forward-loo= king statements are not guarantees and are subject to risks and uncertainti= es that may cause actual results to differ materially including the possib= ility that the anticipated benefits from the merger and ChevronTexaco's inv= estment in Dynegy cannot be fully realized the possibility that costs or d= ifficulties related to the merger will be greater than expected and the im= pact of competition and other risk factors relating to our industry as deta= iled from time to time in ChevronTexaco's periodic reports filed with the S= EC.=20 MAKE YOUR OPINION COUNT - Click Here=20 /CONTACT: media Fred Gorell +1-415-894-4443 or investors Pierre Breber= +1-415-894-9376 both of ChevronTexaco Corp./ 18:39 EST=20 Copyright ? 2000 Dow Jones & Company Inc. All Rights Reserved. =09 What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Enrons secret bid to save deregulation - PRIVATE MEETING Chairman pitches his Body:: Jeff Candidly this wouldn't have been my approach (posh location closed format odd group seemingly self-serving agenda). I read the article below as unsympatheticand almost mocking in its tonetoward Enron. It's noteworthy theBeverly Hills meeting was not covered in the Los Angeles papers. Instead this article comes fromthe front page of the Bay Area's San Francisco Chronicle (Democratic bastion and home to both of California's United States Senators power broker Willie Brown Attorney General Bill Lockyer and the state's public utility commission). Consistent with myconcern about a coast-to-coast firestormengulfing Enron the New York Times ran two articles today that were unsupportiveof the company. q Senator Calls for Hearings Into Energy Regulators' Moves By CHRISTOPHER MARQUIS Senator Dianne Feinstein called for hearings into possible improprieties between members of the F.E.R.C. and private energy interests. q Enron's Dispute With Utility in India Grows More Tangled By SARITHA RAI The dispute between the Enron Corporation and Indian federal and state government officials keeps getting messier. These follow the Times' tough piece on Ken Lay yesterday. Undoubtedly the Washington Post will have to get into fray soon. My feeling is that just as with the business side Enron's public policy strategy needs be well informed sophisticated and comprehensive. I fear that anything less will fuel the potential of undesirable outcomes for Enron's reputation leadership and shareholdervalue. Kevin 213-926-2626 PS - May I have a copy of the position paper that was circulated in the Beverly Hills meeting. The Gate www.sfgate.com Return to regular view Enron's secret bid to save deregulation PRIVATE MEETING: Chairman pitches his plan to prominent Californians Christian Berthelsen Scott Winokur Chronicle Staff Writers Saturday May 26 2001 ?2001 San Francisco Chronicle URL: Energy executive Kenneth Lay head of powerful Enron Corp. quietly courted Arnold Schwarzenegger Richard Riordan Michael Milken and other luminaries this week in Beverly Hills to drum up support for his solution to California's energy crisis. His prescription called for more rate increases an end to state and federal investigations and less rather than more regulation. Lay a close friend of President Bush and one of his largest campaign contributors hosted a private 90-minute meeting in a conference room at the Peninsula Hotel in Beverly Hills on Thursday. Among the participants were Milken the former head of the Drexel Burnham Lambert investment banking firm who pleaded guilty to fraud charges in 1990 and who now runs a think tank based in Santa Monica movie star Schwarzenegger and Riordan the mayor of Los Angeles. Schwarzenegger and Riordan have been courted recently as GOP gubernatorial candidates. One participant who agreed to speak on the condition he not be identified said the meeting appeared to be geared toward getting participants to support Lay's vision and then champion it to officials who are trying to solve the state's energy mess. PLAN TO RESCUE DEREGULATION The source said the timing and tone of the meeting suggested Lay is concerned that California will abandon its disastrous experiment with power markets by either re-regulating the system or creating a government authority to provide electricity. Gov. Gray Davis signed legislation last week to create and fund a state power authority that would build buy and run power plants in California. They're trying to rescue deregulation the source said of Enron executives. They think the whole state power authority is a bad idea. At the meeting Enron representatives circulated a four-page position paper titled Comprehensive Solution for California which was obtained by The Chronicle. It said ratepayers should bear responsibility for the billions in debt incurred by the state's public utilities and that investigations of power price manipulation and political rhetoric are making matters worse. The paper made no mention of the possibility that much of the runaway electricity costs in California is due to market manipulation by power generators and traders -- a possibility given credibility in studies by regulators and economists. One of the talking points read: Get deregulation right this time -- California needs a real electricity market not government takeovers. Another point suggested giving consumers monetary rebates for conserving electricity. INVOLVED IN EARLY DAYS Lay has been an aggressive champion of deregulated electricity markets and was an early advocate in persuading California to begin its experiment with a competitive power market system. Lay has created a new kind of company in the process one that essentially produces nothing but makes money as a middle-man buying electricity from generators and selling it to consumers. During the first quarter of this year Enron's revenues increased 281 percent to $50.1 billion. Asked about the purpose of the meeting Karen Denne a spokeswoman for Enron said she would look into that and then did not return repeated telephone calls seeking comment. One participant said Denne was present at the meeting. D.C. CONNECTIONS Meanwhile Lay's power in Washington is reported to have reached unprecedented heights. According to a story in yesterday's New York Times Lay supplied the Bush administration with a list of candidates for jobs regulating the power industry and even interviewed one of them. The story also said Lay essentially threatened to seek the removal of the chairman of the Federal Energy Regulatory Commission Curt Hebert if he does not support Lay's desire to further deregulate the nation's electricity system. Lay denied the allegation. Also in attendance at this week's meeting were Bruce Karatz chief executive of home builder Kaufman & Broad Ray Irani chief executive of Occidental Petroleum and Kevin Sharer chief executive of biotech giant Amgen. Among those who were invited but did not attend were former Los Angeles Lakers star Earvin Magic Johnson supermarket magnate and Bill Clinton supporter Ron Burkle and Dennis Tito recently returned from the world's first civilian space trip. Milken through a spokesman confirmed that he attended the meeting but declined to be interviewed. Schwarzenegger could not be reached for comment through a publicist and Sharer did not return a call yesterday afternoon. A spokesman for Riordan Peter Hidalgo said the Los Angeles mayor attended but was not intending to formulate any kind of policy position on this issue. His intent is to listen to all sides. Attached to the Enron handout was a two-page open letter addressed to Davis and the state Legislature apparently prepared for those who support Lay's position and would be willing to sign their names to it. The source who participated in the meeting said those assembled appeared noncommittal and asked a number of questions of Lay but did not agree to champion his agenda. E-mail the writers at [email protected] and Scott Winokur at [email protected] . ?2001 San Francisco Chronicle Page A - 1 What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Re: Canary Wharf - Update for Executive Committee Body:: Maybe we should knock down the walls of those cavernous offices on the top= =20 floor. Mark Frevert@ENRON 07/24/2000 06:17 AM To: Steven J Kean/HOU/EES@EES Cindy Olson/Corp/Enron@ENRON Mark=20 Palmer/Corp/Enron@ENRON Mark Koenig/Corp/Enron@ENRON cc: =20 Subject: Canary Wharf - Update for Executive Committee Just a quick update on our real estate escapades. Regards . Mark ----------------- What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: RE: Confidential Concern Body:: Sharon I suggest that we ask Valeria Hope to investigate the fact situation here and report back to us jointly. What do you think? Michelle What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Re: NEW DRAFT OF ENRON STATEMENT Body:: As discussed. ----------------- What should this email be categorized as? [/INST] Document editing/checking/collaboration <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Andre LeGAllo Body:: Any problem? please advise Don. ----------------- What should this email be categorized as? [/INST] Logistic Arrangements <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: <<Concur Expense Document>> - March 2001 Body:: nan What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Confidential Information and Securities Trading Body:: I couldn't open link. I s this something new for me to sign or have I already complied? ----------------- What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Revised list of PRC Reps Body:: Make sure this is consistent with the lists we put in the memo. thanks What should this email be categorized as? [/INST] Document editing/checking/collaboration <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: EPSA/EEI on Reliability Body:: This follows up on Rick's inquiry late last week on the talks between EPSA and EEI on reliability. Yesterday I spoke with Mark Bennett and Donn Salvosa of the EPSA staff. Mark did the talking. The upshot is that EPSA and EEI are meeting to see if they can't agree on reliability legislation. EEI is working off of the NERC draft and has sent a version to EPSA dated 9/14 (see attached) that was the basis for last Thursday's meeting. EPSA is now doing some drafting of its own. I need to read the 9/14 draft but the fact that they are working off of the old NERC language is of considerable concern. EPSA staff emphasizes the value of having EEI off the NERC reservation (which is good in terms of showing that there is NERC consensus) but I think EPSA staff may be too flexible in how they are approaching it. I reminded them of our position and concerns and of Jim's prepared statement on EPSA's behalf filed for the Sept. 11 Barton hearing. EPSA staff claims that other EPSA members are OK with them embarking on this project. It is not clear if this effort will succeed. EPSA staff said EEI's board insists on having engineers do reliability which is objectionable to EPSA. EPSA staff seems to think that some type of reliablity SRO is inevitable and that it is wise to get the best one they can. I will check with some other EPSA members. What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Urgent!!! FLSA legislation is on the fast track Body:: Joe - could you or someone in the office get in touch with Michelle? Thanks What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Report on Energy and Commerce Status (Ignore Earlier E-Mail That Was Not Complete) Body:: Confirming earlier indications at about 3 pm EDT today Chairman Tauzin convened the committee to issue a joint statement with Rep. Waxman and then recessed the committee subject to the call of the chair following the Memorial Day Week Recess. Congress will not return until the week of June 4 but staff level discussions will likely occur after the three-day weekend. Chairman Tauzin said that the committee is receiving conflicting information on the facts in California. He said it is better to take a little longer to get the facts straight and evaluate various options rather than act quickly but in the wrong way. He did say he expects that the committee will come to a bipartisan agreement after the recess. Behind the scenes we hear that Democrats appear not to want to reach an agreement instead preferring to keep the issue alive. Republicans on the other hand want to spare their vulnerable West Coast Members another recorded vote against price caps. Thankfully following our collective efforts yesterday the discussion has moved off of the 80/20 long term contract requirement. Republicans are poised to offer the Ose bill as an alternative for discussion and amendment if an agreement is not reached. The Ose bill would extend FERC's pricing formula to 24/7 and throughout the West. Staff report that Members were far from agreement and that no one concept was embraced for further refinement. It does appear however that some Members such as Rep. Mary Bono (R-CA) are pushing for some type of price mitigation that they can vote for. With Republicans increasingly worried about the political impact of the energy issue we will need to continue our work next Tuesday starting with an in-depth analysis of the Ose bill. What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: i2 Bandwidth Management Agreement Press Release Body:: fyi What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Risk Matrix Body:: FYI. I had started an informal discussion group to work on political/regulatory risk.. I included Jane Jim Bouillian and Scott Gahn. Jane sent me the atached as an example of how her group approaches issues in the acquisition context. ----------------- What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Re: Next Draft of Letter to Dunn Body:: I think this is an excellent letter. I agree with Sue's comments and have included her changes on Page 3. All changes have been marked in this version. What should this email be categorized as? [/INST] Document editing/checking/collaboration <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Regulatory Policy Committee Body:: ----------------- What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Draft of California Contact List Body:: Steve ? This is a draft of the contact list I promised you.? There are still some typos in it.? I will clean them up and get send you a draft in the morning that is ready for circulation. ? This list is made?up of?people that I know?and trust.? By an large I have excluded sitting pubic officials.? In cases where a given organization has several useful contacts with similar knowledge I have listed just one person for now. ? Give me a call at your convenience and we can discuss this in great detail. ? Kevin 213-926-2626 - Kevin Scott - Key Contacts - Draft.doc What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Confidential Inquiry Body:: Steve I hope this email finds you well. ?Don't know if you remember me exactly however I worked at Enron for 4 years working closely with the Associate/Analyst Program under Charlene Jackson. ?I had to spread my wings a bit and flew to Reliant Energy to further enhance my career. As a former Enron employee I know Enron-candidate material! ?I would like to submit confidentially of course a resume on AJ McCormac. ?AJ is currently the Executive Director for Workforce Planning (HR) here at Reliant. ?She is very interested in opportunities at Enron and has the right stuff to compliment your strategic direction and objectives for Human Resources. ?I am confident that after just a few minutes with AJ you will quickly recognize her superior expertise. Realizing how expensive executive search firms can be advice from a Enron fan is free. Thank you for your time and consideration. ?If you would like to contact her directly here at Reliant her number 713-207-7162. Ginger Gamble 713-207-8824 (See attached file: AJ Confidential Resume 9-21-00.doc) (See attached file: AJ Confidential Resume 9-21-00.doc) - AJ Confidential Resume 9-21-00.doc What should this email be categorized as? [/INST] Employment arrangements <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Re: CONFIDENTIAL - Residential in CA Body:: Before any decision is made I think we really need to weigh in with EES on the ramifications (both PR and legislative) of turning back 16000 residential customers. I strongly believe that the public hit we will take will be far greater than our actual out-of-pocket losses. We will be crucified by the public media consumer groups legislators governor attorney general etc. and this action will reaffirm our reputation of packing up and leaving when it's not in our interest. The impact of this action would be exacerbated since it is on the heels of UC/CSU. I would also argue that this hurts our national dereg efforts. If we're advocating that competition and choice benefits consumers and then we turn around and pull out of a market and abandon customers when we're not profiting we'll kill any chances we have of ever serving retail customers in California -- or in any other state. We look foolish advocating for direct access when we're not willing to serve our existing -- let alone future customers What about a preemptive strike that engages these 16000 customers to weigh in on direct access -- i.e. a letter that says Enron may be forced to cancel its contract -- call/write/send the enclosed postcard to your legislator and tell them you want to keep your right to choose your energy service provider. Our credibility is on the line. Before we take this action we need to be cognizant of all the long-range strategic implications and we need to seriously weigh the negative impact this will have on our corporate reputation on our legislative abilities and on our commercial success going forward. kd James D Steffes 04/12/2001 09:05 PM To: Jeff Dasovich/NA/Enron@Enron Paul Kaufman/PDX/ECT@ECT Sandra McCubbin/NA/Enron@Enron Richard Shapiro/NA/Enron@Enron Janel Guerrero/Corp/Enron@Enron Mark Palmer/Corp/Enron@ENRON Karen Denne/Corp/Enron@ENRON Susan J Mara/NA/Enron Peggy Mahoney/HOU/EES@EES Harry Kingerski/NA/Enron@Enron cc: Dan Leff/HOU/EES@EES Subject: CONFIDENTIAL - Residential in CA In the meeting today no decision was made about what to do with Enron's 16000 residential customers. Each of the contracts gives a basic 30 day out right to Enron. That being said I think that we have a short window to push for DA before any public action impacts us in Sacramento. I realize that the ultimate action (which I think is inevitable) makes it harder for our advocacy on DA but real $ are flowing out of the company. EES will give us notice when a decision is reached. Thanks Jim What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: GREAT NEWS ****FERC Order on Morgan Stanley Complaint Against ISO Body:: See below. this is one of the issues that concerned us more than price caps because it could limit our ability to move power to other markets in the west. In addition if you get questions from the analysts on reregulation or price caps it is worth pointing out that the high prices prevailing in many markets help our retail sales pitch to end use customers and create opportunities for our wholesale price risk management services . . . even a $250 price cap is 5-10 times what large customers are accustomed to paying. ----------------- What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Draft - Background and Q&A for CA residential customers Body:: Please send any comments directly to Peggy. ----------------- What should this email be categorized as? [/INST] Document editing/checking/collaboration <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Re: Trade Mission Body:: Terry was acting with full coordination from Jose. The problem was this: Daly insisted someone speak on behalf of the group to the press (and designated Terry to be the one) Terry did not have the updated information that we were about to meet with the government officials and deliver a slightly different message (i.e. that we needed to know if the government planned to really open Petrobras or not -- the implication being that we would work within either decision but we needed to know one way or the other) Terry was simply not in possession of this information and no one had given it to him (probably because they had no reason to assume that Terry would be thrust in front of the press) moreover it's hard to see how Terry could have taken such a position publicly anyway. By my eyes Terry did the best he could and we had an unavoidable communications bust. I know the Southern cone team is moving to make it right but I see absolutely no reason to come don on anyone about this. Richard Shapiro 02/17/2000 09:47 PM To: Steven J Kean/HOU/EES@EES cc: Subject: Re: Trade Mission What was the outcome? Steven J Kean 02/17/2000 08:13 AM To: Richard Shapiro/HOU/EES cc: Subject: Re: Trade Mission FYI. I will call Terry and get in touch with Jim/Diomedes ----------------- What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: <<Concur Expense Document>> - JB 003 Body:: ----------------- What should this email be categorized as? [/INST] Logistic Arrangements <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: IEP News 4/20 Body:: AP Online April 20 2001 Friday 7:57 AM Eastern Time Financial pages ????238 words Power Co. Executives Lose Bonuses LOS ANGELES Contra Costa Times April 20 2001 Friday STATE AND REGIONAL NEWS K560 ????460 words Energy officials accused of manipulating natural gas market ????defend actions By Andrew La Mar Los Angeles Times April 20 2001 Friday Home Edition Page 3 715 words ???? CALIFORNIA AND THE WEST ??A U-TURN ON CAR TAX REBATES ??LEGISLATION: ????STARTING JULY 1 FEE REDUCTION WILL BE FIGURED DIRECTLY INTO VEHICLE ????REGISTRATION BILLS NOT REFUNDED BY MAIL. CARL INGRAM TIMES STAFF WRITER ????SACRAMENTO Los Angeles Times April 20 2001 Friday Home Edition Page 3 453 words ???? CALIFORNIA AND THE WEST ??LOCKYER ASKS JUDGE TO ORDER FIRMS TO RELEASE ????RECORDS ROBERT J. LOPEZ and RICH CONNELL TIMES STAFF WRITERS Los Angeles Times April 20 2001 Friday Home Edition Page 3 1426 ????words CALIFORNIA AND THE WEST ??LEGISLATORS UNITE OVER ENERGY PRICE ISSUE ????POWER: BIPARTISAN CONGRESSIONAL DELEGATION CALLED TOGETHER BY DAVIS SAYS U. ????S. MUST STEP IN TO PROTECT STATE FROM MANIPULATION BY SUPPLIERS. MITCHELL ????LANDSBERG and MIGUEL BUSTILLO TIMES STAFF WRITERS The Orange County Register April 20 2001 Friday STATE AND REGIONAL NEWS ???? K497 846 words Federal energy commission considers price fix for state ????energy market By Dena Bunis San Jose Mercury News April 20 2001 Friday STATE AND REGIONAL NEWS ????K512 696 words In response to power woes rating agencies have California ????on credit watch By Jennifer Bjorhus San Jose Mercury News April 20 2001 Friday STATE AND REGIONAL NEWS ????K520 1069 words Issues still remain on what power consumers will ????eventually pay By John Woolfolk and Michael Bazeley The San Francisco Chronicle APRIL 20 2001 FRIDAY FINAL EDITION NEWS ????Pg. A4 765 words Edison pushes lawmakers to accept deal David Lazarus The Associated Press State & Local Wire April 20 2001 Friday BC cycle ????7:04 AM Eastern Time State and Regional 438 words Most Edison executives ????going without bonuses By GARY GENTILE AP Business Writer LOS ANGELES The Associated Press State & Local Wire April 19 2001 Thursday BC cycle ???? State and Regional 901 words Top political aide discusses Bush's low-key ????style By RON FOURNIER AP White House Correspondent WASHINGTON The Associated Press State & Local Wire April 19 2001 Thursday BC cycle ???? State and Regional 727 words Utility commission staff says parent ????company profiting from energy sales BOISE Idaho The Associated Press State & Local Wire April 19 2001 Thursday BC cycle ???? State and Regional 820 words Legislators probe possible power natural ????gas collusion By DON THOMPSON Associated Press Writer SACRAMENTO Copyright 2001 Associated Press AP Online April 20 2001 Friday 7:57 AM Eastern Time SECTION: Financial pages LENGTH: 238 words HEADLINE: ?Power Co. Executives Lose Bonuses DATELINE: LOS ANGELES BODY: ???Senior executives at Southern California Edison and its parent company went without hundreds of thousands of dollars in bonuses in 2000 because of California's power crisis. ??Edison International's chairman and chief executive John Bryson was paid $950000 in 2000 compared with salary and bonus totaling $2.16 million in 1999. ??Stephen Frank the chairman and chief executive at Southern California Edison was paid $617000 in 2000 compared with salary and bonus totaling $1.3 million in 1999 according to the company's proxy statement filed with the Securities and Exchange Commission. ??The company also said Thursday it would not award merit increases to executives in 2001 because of the continuing crisis. ??In a similar statement released Tuesday Pacific Gas and Electric Corp. revealed it also withheld bonuses for its top two executives although they did receive raises. ??Edison and PG&E say they have lost nearly $14 billion since June to high wholesale prices that the state's electricity deregulation law bars them from passing on to consumers. PG&E saying it hasn't received the help it needs from regulators or state lawmakers filed for federal bankruptcy protection April 6. ??Edison is continuing to work with state officials and its ??reditors. ?????(PROFILE ?????(CO:Southern California Edison Co. TS:SCE) ?????(CO:Pacific Gas and Electric TS:PCG IG:ELC) ?????) LOAD-DATE: April 20 2001 of 78 DOCUMENTS ??????????????Copyright 2001 Knight Ridder/Tribune News Service ???????????????????????Knight Ridder/Tribune News Service Costa Times 20 2001 Friday SECTION: STATE AND REGIONAL NEWS KR-ACC-NO: ?K560 LENGTH: 460 words HEADLINE: Energy officials accused of manipulating natural gas market defend actions BYLINE: By Andres LaMar BODY: ??SACRAMENTO _ Energy officials who are accused of manipulating California's market for natural gas defended their actions on Thursday and attributed the state's skyrocketing gas prices to increased demand the weather and other factors. ??The explanation however drew skepticism from lawmakers in the wake of expert testimony alleging that one Texas firm El Paso Natural Gas Co. had engineered a classic case of monopoly power by controlling the pipeline that delivers gas to the state. ??At the outset of the Thursday's hearing Assemblyman Darrell Steinberg D-Sacramento noted the huge run-up in the cost of natural gas which went from $6.6 billion for the entire year of 1999 to $12.3 billion for sales in 2000 and to $7.9 billion for the first three months of this year. ??Steinberg zeroed in on the difference between California and other parts of the country. From March 2000 to February 2001 natural gas prices have risen 489 percent compared to a 266 percent increase in New Mexico and a 247 percent jump in Chicago. ??Steinberg asked Ralph Eads the president of an El Paso Natural Gas Co. subsidiary for an explanation. ??The 275 percent difference you say is attributable completely to constraints on the pipeline and demand? Steinberg asked. ??Yes Eads replied. Eads said the state's energy crisis which led power plants to run harder and longer dramatically increased demand for natural gas over the summer and a winter with temperatures about 15 percent cooler than the year before exacerbated the problem. ??In another twist to California's deregulation nightmare El Paso officials said they gained greater control of the pipeline after the Pacific Gas & Electric Co. relinquished the capacity four years ago. At that time PG&E's movement of the gas and the prices it could charge were regulated by the Public Utilities Commission. ??In other developments at the Capitol on Thursday lawmakers called on the federal government to re- regulate natural gas sales at the California border and U.S. Sen. Joe Lieberman D-Conn. said federal regulators should impose price caps on California's wholesale electricity market. ??The Assembly held considerable debate on the resolution asking for re-regulation with Democrats accusing President George W. Bush of doing nothing to come to the aid of California and Republicans defending the administration. ??I'm learning an interesting lesson that all the problems of the world started after Jan. 21 and the inauguration of the new president said Assemblyman Bill Leonard R-San Bernardino. ??KRT CALIFORNIA is a premium service of Knight Ridder/Tribune ??(c) 2001 Contra Costa Times (Walnut Creek Calif.). ??Visit the Contra Costa Times on the Web at http://www.cctimes.com/ JOURNAL-CODE: CC LOAD-DATE: April 20 2001 of 78 DOCUMENTS 2001 / Los Angeles Times Angeles Times ?????????????????????April 20 2001 Friday Home Edition SECTION: Part A Part 1 Page 3 Metro Desk LENGTH: 715 words HEADLINE: CALIFORNIA AND THE WEST A U-TURN ON CAR TAX REBATES LEGISLATION: STARTING JULY 1 FEE REDUCTION WILL BE FIGURED DIRECTLY INTO VEHICLE REGISTRATION BILLS NOT REFUNDED BY MAIL. BYLINE: CARL INGRAM TIMES STAFF WRITER DATELINE: SACRAMENTO BODY: ??Gov. Gray Davis and the Legislature spun a U-turn Thursday and scrapped a costly program that requires motorists to first pay their car tax and then get a rebate in the mail. ??Starting July 1 the state Department of Motor Vehicles will send owners of approximately 26 million vehicles registration renewal bills already reduced by the amount of the vehicle license fee rebates. ??On a unanimous roll call the Senate voted final approval and sent to Davis an urgency bill SB 52 that repealed the rebate program which the governor had previously fought for and defended. ??In addition to abolishing the rebates the legislation reduces by 67.5% the amount motorists must pay for the upcoming year the level that lawmakers and former Gov. Pete Wilson envisioned in 1998 when they began cutting the fee. It had been about 2% of a vehicle's market value. ??Davis immediately signed the repeal bill saying only that the new law will expedite relief to taxpayers and greatly reduce administrative costs. ??The governor's muted observation contrasted with his effusive support of the rebates last year when he said Californians don't appreciate the fact that they're getting a rebate unless they see it in their hands. ??At the time Davis and the Legislature had the choice of simply cutting the car tax which voters might not notice or sending checks in the mail which Davis felt would have a greater impact. ??The rebates which began Jan. 1 were scheduled to continue through 2002 when Davis intends to run for reelection. In 2003 the license fee was to have fallen permanently with no more rebates. ??The whole rebate scheme was good only through the next gubernatorial election cycle said Sen. Tom McClintock (R-Thousand Oaks) who supported reductions in the license fee but opposed the rebates. ??Until July 1 the DMV will continue to bill motorists for the full amount of their license fee which includes a 35% reduction from last year. ??Then we return to you an additional 32.5% rebate making a total reduction of 67.5% said DMV spokesman Bill Branch. Starting with license renewals on July 1 the DMV bills will include the full tax cut. ??A Senate analysis of the repeal bill noted that the current awkward system . . . effectively requires taxpayers to overpay their vehicle license fee and then await a rebate check from the state--a system that is at best difficult to explain. ??But as the California economy tightened the state's budget surplus shrank and taxpayers shelled out approximately $ 50 million a day to buy electricity the costs of the rebate program threatened to become a political embarrassment to Davis. ??Projected administrative and postage costs of the rebate program alone were estimated at $ 22 million this year and another $ 22 million or so next year. ??Last year state Sen. Joe Dunn (D-Santa Ana) and McClintock sought to eliminate the rebates and give drivers their full tax cuts when they register their vehicles. Under pressure from Davis the bill failed. ??It was killed behind the scenes at the insistence of the governor McClintock said Thursday. He didn't want it on his desk. ??This year Dunn launched a similar bill but his name was struck from it as the lead author in the Assembly and the name of Sen. Wes Chesbro (D-Arcata) was substituted. ??In a speech Thursday Sen. Ross Johnson (R-Irvine) suggested that Davis' performance on the issue in an earlier time and a more just society would have resulted in his public flogging by representatives of taxpayers. ??The repeal bill was passed 78 to 0 by the Assembly on Monday and sent to Davis by the Senate on a 34-0 vote Thursday. ??If the rebates were to be abolished the bill had to pass this week in order to take effect July 1 said Branch the DMV spokesman. This is because motorists must be advised 60 days in advance that their registration renewals are due. ??We have to reprogram all the computers. We have to print new bills and mail them by May 1 for the July 1 expiration he said. It will be a little tight but we will still make it. ??Branch said that since the Jan. 1 start of rebates checks totaling $ 454 million have been sent to 7.4 million vehicle owners at an extra administrative cost of $ 9.4 million. LOAD-DATE: April 20 2001 of 78 DOCUMENTS 2001 / Los Angeles Times Angeles Times ?????????????????????April 20 2001 Friday Home Edition SECTION: Part A Part 1 Page 3 Metro Desk LENGTH: 453 words HEADLINE: CALIFORNIA AND THE WEST LOCKYER ASKS JUDGE TO ORDER FIRMS TO RELEASE RECORDS BYLINE: ROBERT J. LOPEZ and RICH CONNELL TIMES STAFF WRITERS BODY: ??California Atty. Gen. Bill Lockyer ratcheting up his investigation of possible civil and criminal violations by the state's power suppliers is asking a San Francisco judge to order two firms to hand over confidential records. ??In a motion filed Thursday in Superior Court Lockyer said Reliant Energy and Mirant Corp. have failed to comply with subpoenas for documents that were to be produced by March 19. ??Amid soaring electricity costs and rolling blackouts the attorney general launched an investigation of possible manipulation of wholesale electricity prices that have skyrocketed to record levels and have financially crippled the state's major utilities. ??Dozens of other public and private power suppliers are complying with the subpoenas. ??But in an interview Lockyer accused Reliant and Mirant of stonewalling investigators so they can keep enjoying these exorbitant profits and prices for as long as possible. ??Ultimately the companies will have to honor the subpoenas he said. I'm going to pit bull them he said. This is one we win. ??Both companies say they have done nothing wrong and played by the rules of California's flawed electricity deregulation plan. ??A spokesman for Houston-based Reliant said Thursday the firm is seeking court action of its own to ensure that sensitive business information will not be shared with other public agencies or its competitors. ??Last week Reliant asked a Los Angeles Superior Court judge to clarify the attorney general's obligation to keep proprietary information confidential. ??We're glad to cooperate with his investigation to the extent we can said Reliant spokesman Richard Wheatley. But we have not received sufficient assurances that Lockyer would keep the data confidential. ??Lockyer called Reliant's court filing frivolous and propagandistic and insisted that adequate safeguards are in place. He reserves the right under state law to share information with other government agencies aiding in his investigation but has said he will keep sensitive business information from being made public. ??Atlanta-based Mirant demanded and received similar guarantees of confidentiality Lockyer said. Mirant did not return phones calls Thursday. ??Lockyer did not discuss details of the probe or the kinds of information he's seeking. But based on the investigation so far he said it's beginning to get interesting. ??Other records indicate that the attorney general has sought 91 categories of information about the power merchants' activities. They include the operation of power plants trading information that may have been shared by private power suppliers and bidding strategies in the California market. LOAD-DATE: April 20 2001 of 78 DOCUMENTS 2001 / Los Angeles Times Angeles Times ?????????????????????April 20 2001 Friday Home Edition SECTION: Part A Part 1 Page 3 Metro Desk LENGTH: 1426 words HEADLINE: CALIFORNIA AND THE WEST LEGISLATORS UNITE OVER ENERGY PRICE ISSUE ?POWER: BIPARTISAN CONGRESSIONAL DELEGATION CALLED TOGETHER BY DAVIS SAYS U. S. MUST STEP IN TO PROTECT STATE FROM MANIPULATION BY SUPPLIERS. BYLINE: MITCHELL LANDSBERG and MIGUEL BUSTILLO TIMES STAFF WRITERS BODY: ??This may be the surest sign yet of the depth of California's energy crisis: A bipartisan cross-section of the state's congressional delegation brought together Thursday by Gov. Gray Davis not only agreed about the severity of the problem but also about the need for swift federal intervention. ??This meeting did not have the word 'Democrat' or 'Republican' used once Rep. Darrell E. Issa (R-Vista) said of the unusual spirit of cooperation at the meeting near Los Angeles International airport. ??Members of both parties said the Federal Energy Regulatory Commission must slash wholesale electricity prices so California utilities can once again afford to buy power. Since January the state government has been buying electricity on their behalf as skyrocketing wholesale prices put Pacific Gas & Electric Co. and Southern California Edison billions of dollars into debt and many power suppliers refused to sell to them PG&E has since filed for Chapter 11 bankruptcy protection. ??Although the Bush administration has said repeatedly that it is strongly opposed to price caps and FERC has refused to grant them California Republicans at the energy meeting said they are optimistic that the administration will agree to some other form of price regulation. They brushed aside the notion that such regulations might conflict with their ideological belief in a free market. ??This is not a free-enterprise situation Rep. Duncan Hunter (R-Alpine) said after the meeting. In fact it's just the opposite. ??Specifically citing the huge disparity between natural gas prices charged to California and those charged in other Western states he said California clearly has been the victim of unreasonably high energy costs. Under federal law the FERC must regulate the prices of companies if it finds they are exerting market power to drive prices to unreasonable levels. ??Executives from two Texas energy companies meeting with legislators in Sacramento denied Thursday that they had caused natural gas prices in California to artificially skyrocket by hoarding access to a critical pipeline into the state. ??After the extraordinary meeting in Los Los Angeles Rep. Brad Sherman (D-Sherman Oaks) said the biggest disagreement between California Democrats and Republicans appeared to be their relative faith--or lack thereof--in the ability of President Bush and his administration to help California. There has been much speculation that Bush who lost California in November has no political motive to help the state. ??We Democrats said Sherman hope very much that our skepticism is proven wrong. ??Davis--who sat flanked by Democratic U.S. Sen. Dianne Feinstein and the governor's newly appointed chief energy advisor S. David Freeman--said he used the meeting mainly to discuss the importance of conservation by Californians this summer and to ask the congressional delegation to pitch in. Five Republicans and more than a dozen Democrats attended the gathering. ??Feinstein said Thursday that she has asked for a third time to meet with Bush to discuss the energy situation. Meeting with Times reporters and editors Wednesday she described a recent meeting with Vice President Dick Cheney in which she said he ignored her appeal for federal assistance. ??Feinstein has been among those critical of natural gas companies saying they appear to have constricted access to a California-bound pipeline to run up prices. ??The Brattle Group a respected consulting firm alleged Wednesday before an Assembly committee that Dynegy Inc. and El Paso Natural Gas Co. had manipulated the market by charging so much for the rights to their pipeline capacity that they had in effect withheld access to it. ??That action the experts said directly forced companies trying to deliver gas to California to look for alternatives clogging other pipelines and causing a surge in prices. ??The explanation El Paso executives said was simple: Demand for gas soared in California because generators that use gas to make electricity increased production last year in response to the energy crisis. ??We're not withholding capacity--no one is said El Paso Merchant Energy President Ralph Eads. With these prices you want to sell every molecule. ??In other developments Thursday: ??* The agreement between Davis and Edison International to return its ailing utility arm to financial health is in deep trouble and could be rejected by legislators the Standard & Poor's credit rating agency said in a note to clients citing legislative and other sources. A rejection of the deal would be a humiliating setback for the governor S&P said. ??The agreement calls for among other things the sale of Edison's transmission grid to the state for $ 2.76 billion and the sale of $ 2 billion in bonds--both designed to pay off the utility's huge electricity debt. Edison agreed to several constraints including the sale of electricity to the state at prices tied to the cost of producing power. ??Since they returned Monday from a two-week recess state legislators have been sharply critical of the Edison agreement and have indicated a desire to tinker with aspects of the deal. Some lawmakers have said publicly that a bankruptcy protection filing by Edison like that of PG&E might not be such a dire outcome. ??But a senior Edison executive said it is way too early to give up on passage of the proposal which legislators have not yet seen in official form. ??There is an education process to do here the executive said of the highly detailed 38-page document. The legislators should be asking questions. That is appropriate. ??* The Public Utilities Commission voted to investigate whether alternative energy providers violated contractual agreements by withholding supplies from PG&E and Edison which owe them hundreds of millions of dollars. ??The action Commissioner Carl W. Wood said was prompted in part by lawsuits some providers have filed seeking release from their contracts with the cash-starved utilities. The producers of solar wind and geothermal energy account for more than 25% of California's electricity supply. ??The question is whether we will be able to rely on them in the long hot days of summer Wood said. ??Jack Raudy of the Renewable Energy Creditors Committee said the PUC needs to address the $ 700 million the producers are owed. All we have gotten is rhetoric from the governor the PUC and the utilities he said. ??* An $ 850-million plan to entice Californians to conserve precious megawatts appears to be running into roadblocks compounding predictions by state officials of tighter than expected energy supplies in May and June. ??Davis signed the conservation spending package last week earmarking $ 242 million of the new funds for the Public Utilities Commission to distribute to the state's investor-owned utilities to support existing conservation programs. ??But Barbara Hale director of the PUC's Division of Strategic Planning said Thursday that since Pacific Gas & Electric Co. filed for bankruptcy protection April 6 the utility has stopped releasing conservation funds. ??Hale testifying before a state Senate committee said PG&E's decision--coupled with the threat that Southern California Edison could follow a similar route to U.S. Bankruptcy Court--has complicated her agency's efforts. ??PG&E spokeswoman Staci Homrig said her company plans to petition the Bankruptcy Court to have the conservation funds designated as a trust and separated from assets tied up in the bankruptcy proceedings. She said if the court denies the request PG&E would ask to be permitted to pay the expenses anyway. The process she added could take about a month--too long in the view of some legislators given increasingly gloomy energy forecasts for late spring and early summer. ??Deputy Director Bob Therkelsen of the California Energy Commission said his agency had been counting on a number of small power producers to bolster their output during that period. But he said some producers did not purchase the necessary equipment because PG&E and Edison have failed to pay them in full for earlier electricity deliveries. ??It's not a huge amount he said of the anticipated production shortfall but every little bit helps. ??* ??Landsberg reported from Los Angeles Bustillo from Sacramento. Times staff writers Nancy Rivera Brooks in Los Angeles Carl Ingram and Julie Tamaki in Sacramento and Tim Reiterman in San Francisco contributed to this story. LOAD-DATE: April 20 2001 of 78 DOCUMENTS ??????????????Copyright 2001 Knight Ridder/Tribune News Service ???????????????????????Knight Ridder/Tribune News Service ??????????????????????????The Orange County Register 20 2001 Friday SECTION: STATE AND REGIONAL NEWS KR-ACC-NO: ?K497 LENGTH: 846 words HEADLINE: Federal energy commission considers price fix for state energy market BYLINE: By Dena Bunis BODY: ??WASHINGTON _ Californians who see federal re-regulation of the state's crisis-bound energy market as an answer to the impending summer emergency better look for some other solution. ??Even the short-term price fix that the Federal Energy Regulatory Commission may consider at its Wednesday meeting might be too little too late. ??Lobbyists lawmakers and other FERC-watchers say they have seen a slight shift in recent weeks among commission staff and at least one member. There is some willingness they say to consider some price controls even though the Bush administration is adamantly opposed to such measures. ??Many are looking to see if President Bush's choices for the two vacancies on FERC will provide a margin for change. ??But the commission's basic philosophy that open unregulated markets are best is not likely to change soon members say. ??I've been championing a revamping of FERC's antiquated standards for determining market-based rates Commissioner Richard Massey said Thursday. But with no success. My agency is not on the verge of turning on a dime on this market-based pricing. ??The standards are a joke Massey added because the commission never turns down requests for such pricing authority. More than 600 power sellers have been given that authority he said. ??For a power company to be allowed to charge whatever the market will bear it must show FERC for example that it doesn't have the power to manipulate the market and drive prices up. ??Any seller that can't pass our screen needs to fire their consultants and lawyers Massey said. ??While the overall philosophy remains consistent FERC staff has proposed to the commission that a Stage 3 electricity emergency in California should trigger cost-based rates a form of price controls. Such triggers would be in place for one year under the staff proposal. ??The commission may decide Wednesday whether to accept that proposal. It has to make some decision by May 1 on how the market will be monitored from now on. ??The theory behind controlling prices in Stage 3 says a FERC staff report is that during such an emergency generators have the greatest opportunity to manipulate the market and drive prices up. ??But generators have that power during Stage 2 and Stage 1 emergencies says Les Starck Southern California Edison Co.'s manager of federal regulatory affairs. Price caps during Stage 3 might avert the rolling blackouts associated with that level of crisis but they wouldn't do anything to stop generators from jacking up prices the rest of the time he said. ??It is not clear how long it would take for such price controls to take effect should the commission go along with the staff recommendation. ??We're close because summer is approaching Commissioner Linda Breathitt said Thursday. Breathitt who had firmly opposed any form of price controls said in an interview last month that given the worsening crisis in California she was open to considering some short-term measures. ??It's important to me that we address the summer Breathitt said but said she wasn't able to predict what the commission would do Wednesday. ??Even if an order is approved Massey said there could be delays while the power sellers file their costs with regulators and disputes over those filings are handled. ??Sen. Dianne Feinstein said Thursday such a move by the commission would be better than having no controls at all. There's no question that we're going to be in a Stage 3 emergency. ??Feinstein D-Calif. and other Western lawmakers have been urging FERC to step in sooner and with price controls that extend beyond just the emergency period. ??Waiting for Stage 3 to intervene is putting the whole grid at risk said Roger Hamilton a member of Oregon's Public Utility Commission. We have a real stability problem when you cut it that close. ??Feinstein says the future could well rest with the new commissioners particularly Patrick Wood the head of the Texas PUC who many believe will replace Curt Heber as FERC chairman if he is confirmed by the Senate. ??Even if Massey and Breathitt agree on broader price controls as chairman Heber could block consideration of such a move. It's unclear what stance Wood would take as chairman. ??The thing that deeply concerns me about Pat Wood is that he's from Texas Feinstein said. What's reassuring is that it appears from my personal discussion with him is that he appears to be pragmatic. ??But once again timing could be a problem. ??Bush has said he intends to nominate Wood and Nora Brownell a member of the Pennsylvania PUC but has not formally sent their nominations to the Senate. ??The Federal Energy Regulatory Commission is of vital importance right now and to let the time go on without filling the spots makes no sense Feinstein said. Please please please President Bush process your nominees. ??KRT CALIFORNIA is a premium service of Knight Ridder/Tribune ??(c) 2001 The Orange County Register (Santa Ana Calif.). ??Visit the Register on the World Wide Web at http://www.ocregister.com/ JOURNAL-CODE: OC LOAD-DATE: April 20 2001 of 78 DOCUMENTS ??????????????Copyright 2001 Knight Ridder/Tribune News Service ???????????????????????Knight Ridder/Tribune News Service Jose Mercury News 20 2001 Friday SECTION: STATE AND REGIONAL NEWS KR-ACC-NO: ?K512 LENGTH: 696 words HEADLINE: In response to power woes rating agencies have California on credit watch BYLINE: By Jennifer Bjorhus BODY: ??SAN JOSE Calif. _ All three of the nation's influential judges of credit risk now have California on credit watch saying they are deeply concerned about the economic impact of the state's power crisis. ??The Fitch credit rating agency made it unanimous Wednesday when it warned that the thickening electricity quagmire as well as lower than expected tax revenues in February and March could spell broader risk for the state's budget. ??The announcement is a signal that Fitch too may downgrade its ratings on California's nearly $30 billion in public debt a move which could cost taxpayers millions. ??The announcement comes as state lawmakers mull a bailout plan for Southern California Edison Pacific Gas & Electric Co. sits in bankruptcy and state officials bleed through the state's general fund as they purchase expensive electricity for consumers. Earlier this week Gov. Gray Davis announced that the average daily bill for electricity purchases has risen from $45.8 million a day in the last week of March to $73 million a day. ??Moody's Investors Service and Standard & Poor's have already issued their own credit warnings although none of the three agencies has actually downgraded the state's very good double-A credit rating. ??Bond ratings are important yardsticks that bankers and investors use to price municipal and corporate bonds. A downgrade would force California to offer bondbuyers higher interest rates going forward costing taxpayers. ??The state was last at a lower A rating back in 1994. ??Moody's changed California's Aa2 general obligation bond rating outlook from stable to negative on April 6 the day Pacific Gas & Electric Co. filed for bankruptcy. Standard & Poor's has had the state's AA rating outlook at negative since January when the state began buying electricity for the utilities. ??The deciding factor for Fitch said Fitch vice chairman Claire Cohen was the disagreement over how the money from the new electricity rate hike will be spent. ??The California Public Utilities Commission ruled in late March that money generated by higher electricity bills should go first to pay the state Department of Water Resources which has been buying electricity for the utilities. Pacific Gas & Electric Co. has argued that if the state is paid first there won't be any money left for it. ??The utility is formally challenging the PUC decision and the move threatens to hold up the estimated $12 billion to $14 billion of bonds the Department of Water Resources plans to issue to buy more electricity. ??With that being appealed you don't have a clean authorization Cohen said. It signals to me that it could delay the financing process. ??A second concern is that the state isn't collecting as much in taxes as expected Cohen said. Tax collections for both February and March were below forecast. The amount of personal income tax the state collected in those months fell short by $455 million or 14% less than expected. ??Cohen said she made her decision before hearing that the state's power costs now exceed $70 million a day. Cohen and David Hitchcock the California analyst for Standard & Poors agreed those rising costs are a definite concern. ??It doesn't take much of a change in economic growth to make some of these projected fund balances disappear and so we're very worried about what the current economic activity is particularly in Northern California with some of the problems with the high tech area Hitchcock told analysts and investors last week in a conference call. ??State treasurer Phillip Angelides was traveling Thursday and couldn't be reached for comment. Other economy-watchers expressed concern. ??Sandy Harrison assistant director of the state Dept. of Finance said the move reinforced the importance of solving the current power problems soon. ??It's important to note that the rating hasn't been lowered yet and does remain very strong he said. ??KRT CALIFORNIA is a premium service of Knight Ridder/Tribune ??(c) 2001 San Jose Mercury News (San Jose Calif.). ??Visit Mercury Center the World Wide Web site of the Mercury News at http://www.sjmercury.com/ JOURNAL-CODE: SJ LOAD-DATE: April 20 2001 of 78 DOCUMENTS ??????????????Copyright 2001 Knight Ridder/Tribune News Service ???????????????????????Knight Ridder/Tribune News Service Jose Mercury News 20 2001 Friday SECTION: STATE AND REGIONAL NEWS KR-ACC-NO: ?K520 LENGTH: 1069 words HEADLINE: Issues still remain on what power consumers will eventually pay BYLINE: By John Woolfolk and Michael Bazeley BODY: ??SAN JOSE Calif. _ State regulators last month announced an electric rate increase that would average a whopping three cents per kilowatt hour hit bills beginning in May and punish power pigs while sparing energy misers. ??Now much of that is up in the air. ??Higher rates are surely coming _ but not before June. Exactly which consumers and businesses will pay how much is uncertain as regulators rush to forge a rate structure from a tangle of more than 20 proposals. ??Their task has been complicated immeasurably by Gov. Gray Davis' decision to weigh in with a competing rate plan and Pacific Gas & Electric's move into bankruptcy court. ??Little details are moving billions of dollars around said Nettie Hoge of consumer advocate group TURN. ??All the proposals assume a tiered structure that forces the heaviest users of energy to pay the most. But key details yet to be decided mean consumers could see their average rates go up anywhere from 7 percent to 30 percent or more. ??Among them: ??_How much of an overall increase? The Public Utilities Commission approved a 3-cent per kilowatt hour increase last month which would boost utility revenue $4.8 million. Gov. Gray Davis' hike _ left vague in Davis' April 5 television address _ averages 2.8 cents for PG&E customers but only 2.3 cents for customers of Southern California Edison. ??_What regions of the state will pay? The commission agreed to raise rates only for Pacific Gas & Electric and Southern California Edison but Davis would include the additional 1.2 million San Diego Gas & Electric customers. ??_Should heavier users of electricity subsidize those who are exempt from the new rate increase? If so those users will find themselves paying much more than any of the average increase figures being tossed about. ??_How will utilities bill customers retroactively for the increase? At the time of the PUC vote on March 27 commissioner said their increase would take effect immediately. ??Various plans are being presented this week to an administrative law judge working for the commission. The judge is expected to recommend a rate structure to the PUC on May 4. Public hearings would follow May 7-11 and the commission would vote on a plan May 14 condensing to a few weeks a process that normally lasts nearly a year. ??Each of the major proposals before the commission assumes that residential customers using less than 130 percent of their baseline would be exempt from higher rates. That's mandated under a new law that allows the state to buy power. Customers already pay higher rates for exceeding their baseline which is the average basic level of use for each region of the state. ??Each major proposal also sets new tiers with progressively higher rates for medium use at 130 to 200 percent of baseline and heavy use over 200 percent of that level. ??But that's where the similarities end. ??The first distinction among the leading plans comes in the form of an assumption: How many residential customers will avoid any increase because they don't exceed 130 percent of their baseline? Davis says more than half commissioners say a little under half and PG&E says less than a third. ??The second difference among the plans is a real difference: What happens to everyone else? ??Under the plan by utilities commission President Loretta Lynch medium PG&E users would see average bills rise 9 percent and heavy users would see bills increase 36 percent. ??Davis' plan says medium PG&E users would see average bills rise 11 percent while heavy users would pay 37 percent more. But the average total bill increase for PG&E residential customers including those who are exempt would be 20 percent under his plan and 24 percent under Lynch's according to a statement on the governor's web site. ??Business customers would see proportionately greater increases averaging 30 percent under Lynch's proposal and 26 percent under Davis'. ??The most consumer-friendly of the various proposals comes from consumer-rights group TURN. They suggest an overall average residential increase of just 7.5 percent. ??TURN's plan assumes utilities cannot charge other customers more to make up for the energy misers shielded from rate increases under state law. ??PG&E disagrees with that interpretation. The utility wants other residential users to make up for any lost revenue from exempted customers through higher rates. Under the utility's plan residential customers would see an average rate hike of nearly 30 percent. ??The proposal these folks are pushing rips the heart out of that law said Matthew Freedman staff attorney for TURN. ??Another issue affecting consumers is how the utilities can bill for electricity used in April and May before the final plan is approved. ??Utility officials have objected to making the rate structure retroactive. Instead to recoup the revenue they are proposing a flat surcharge that everyone would pay regardless of how much they use. ??Edison proposes a higher surcharge added to bills for a shorter period of time _ in this case June through August. PG&E officials are suggesting a smaller surcharge that would be spread out over 12 months. ??It'll probably be something closer to the PG&E proposal Paul Clanon the commission's director of energy issues. ??All the rate increase proposals stem from a commonly understood problem: California's current frozen rates don't generate enough money to cover the wholesale price of power. The PUC raised rates 10 percent _ or 1 cent per kilowatt hour _ in January in an attempt to help but that turned out to be far from enough. ??In March the Commission approved an additional 3-cent increase. But Davis followed quickly with an alternative proposal. The next day PG&E filed for bankruptcy raising the specter that a federal judge could order even higher rates. ??Although the PUC has sole authority to raise rates under state law Davis' proposal has complicated an already complex process. The governor appointed three of the five members of the commission and his appointees seem inclined to show him deference. But Davis has been slow in filing the details of his plan which has made it hard for the PUC to proceed. ??KRT CALIFORNIA is a premium service of Knight Ridder/Tribune ??(c) 2001 San Jose Mercury News (San Jose Calif.). ??Visit Mercury Center the World Wide Web site of the Mercury News at http://www.sjmercury.com/ JOURNAL-CODE: SJ LOAD-DATE: April 20 2001 of 78 DOCUMENTS ?????????????????Copyright 2001 The Chronicle Publishing Co. ?????????????????????????The San Francisco Chronicle ????????????????????APRIL 20 2001 FRIDAY FINAL EDITION SECTION: NEWS Pg. A4 LENGTH: 765 words HEADLINE: Edison pushes lawmakers to accept deal SOURCE: Chronicle Staff Writer BYLINE: David Lazarus BODY: Although lawmakers are skeptical of the state's multibillion-dollar deal to acquire the power lines of Southern California Edison the head of the utility's parent company warned yesterday that failure to approve the accord could lead to a long and costly bankruptcy. ???But John Bryson chief executive of Edison International told The Chronicle that he thought legislators would want to do the right thing by approving the multibillion-dollar agreement and preventing Edison from following Pacific Gas and Electric Co. into bankruptcy court. ???Bankruptcy for California's two largest utilities could have severe consequences for consumers. Financial analysts said a worsening of the state's energy mess would increase the possibility of higher electricity rates. ???Nevertheless lawmakers are unlikely to accept the Edison deal -- at least not in its present form. ???We are going to go through this thing extensively said state Senate President Pro Tem John Burton D-San Francisco. There are a lot of concerns about the valuation. ???Still he said legislative backing for the accord remains possible as long as Edison is open to amending some of the terms. ???The Edison people are smart enough to know that the Legislature is going to have its say Burton said. ???Indeed sources familiar with the matter said Edison expected a certain amount of tinkering with the deal and would not resist efforts to reach common ground with lawmakers. ???The Assembly members do not view bankruptcy as a favorable alternative said Assemblyman Herb Wesson D-Los Angeles. There will be a big effort to try and work something out. ???Edison's Bryson seems eager at this point to present himself and his company as reasonable business partners who are willing to negotiate in good faith. ???This contrasts sharply with the state's relations with PG&E which turned acrimonious after PG&E blindsided the governor with its bankruptcy filing. Each side blamed the other for the collapse of earlier negotiations. ???We made the decision at an early stage that this was a massive problem for the state and that the best course was to find a practical solution that would allow us to get on with operating our power system Bryson said. ???Bankruptcy he said is absolutely a last resort. It's a long and costly process. ???It is also the last thing Wall Street wants to see. On Wednesday rating agency Fitch Inc. joined Standard & Poor's and Moody's Investor Service in warning that California's credit rating could be lowered because of the state's energy mess. ???The state may be forced to issue junk bonds said Carol Coale an energy-industry analyst at Prudential Securities in New York. This could lead to a surcharge on electricity bills to guarantee the bonds. ???Bryson not surprisingly defended Edison's agreement with the governor as a prudent alternative to bankruptcy. ???This is a very good deal for the state he said. It is not a bailout. Edison gives up a lot to make all this possible. ???Southern California Edison will sell its power lines to the state for $2.8 billion. It also will provide low-cost power to California for 10 years and drop a federal lawsuit seeking full recovery of nearly $5 billion in past debt. ???Critics say the state is paying far too much for Edison's transmission system -- more than two times book value -- and that the power lines are of little use unless PG&E's grid also can be acquired. ???It's a multibillion-dollar ratepayer bailout of Edison said Doug Heller a spokesman for the Foundation for Taxpayer and Consumer Rights in Santa Monica. Edison gets off scot-free. ???Under the most likely scenario lawmakers will seek to reduce the amount paid for Edison's power lines and to increase the role of the California Public Utilities Commission in regulating the utility. ???They also will try to come up with a workable contingency plan for the state if PG&E remains adamant in its refusal to sell off its part of the power grid. ???The deal on the table is still salvageable said Michael Shames executive director of the Utility Consumers' Action Network in San Diego. But Edison needs to understand that what it got from the governor is only a framework not set in stone. ???For his part Bryson signaled that plenty of room existed for give and take on the issue. ???We're just at the initial stage he said. We always have accepted the notion that Edison is a California regulated utility and is subject to the laws of the Public Utilities Commission.E-mail David Lazarus at [email protected]. GRAPHIC: PHOTO Gov. Gray Davis (left) and John Bryson chairman of Edison International announced a transmission line deal on April 9. Bryson said Edison may go into bankruptcy if the deal isn't approved. LOAD-DATE: April 20 2001 of 78 DOCUMENTS ???????????????????The Associated Press State & Local Wire The materials in the AP file were compiled by The Associated Press. ?These materials may not be republished without the express written consent of The Associated Press. ???????????????????????April 20 2001 Friday BC cycle AM Eastern Time SECTION: State and Regional LENGTH: 438 words HEADLINE: Most Edison executives going without bonuses BYLINE: By GARY GENTILE AP Business Writer DATELINE: LOS ANGELES BODY: ??Senior executives at Edison International and its subsidiary Southern California Edison went without hundreds of thousands of dollars in bonuses in 2000 because of California's power crisis. ??Edison International's chairman and chief executive John Bryson was paid $ 950000 in 2000 compared with salary and bonus totaling $2.16 million in 1999. ??Stephen Frank the chairman and chief executive at Southern California Edison was paid $617000 in 2000 compared with salary and bonus totaling $1.3 million in 1999 according to the company's proxy statement filed with the Securities and Exchange Commission. ??The company also said Thursday it would not award merit increases to executives in 2001 because of the continuing crisis. ??In a similar proxy statement released Tuesday Pacific Gas and Electric Corp. revealed it also withheld bonuses for its top two executives although they did receive raises. ??Edison and PG&E say they've lost nearly $14 billion since June to high wholesale prices that the state's electricity deregulation law bars them from passing on to consumers. PG&E saying it hasn't received the help it needs from regulators or state lawmakers filed for federal bankruptcy protection April 6. ??Edison is continuing to work with state officials and its creditors. ??The utility said its board of directors decided to withhold bonuses to all but two key executives because the financial effects of the energy crisis have overshadowed all other aspects of company and individual performance. ??The two executives who did get bonuses earned them for their roles in preserving the viability of the companies during the crisis and for retention purposes Edison said. ??Ted Craver senior vice president chief financial officer and treasurer at Edison International was paid $375000 in 2000 and received a $100000 bonus. His total compensation in 1999 was $652100. ??Harold Ray executive vice president at Southern California Edison received a salary of $390000 in 2000 and a bonus of $50000. His cash compensation in 1999 was $818400. ??PG&E paid Chairman Robert D. Glynn Jr. $945086 in salary and benefits during 2000 a 58 percent decrease from $2.26 million in the prior year according to the company's proxy statement. ??Glynn 57 received a 12.5 percent increase in his base salary but didn't get a bonus. ??Gordon R. Smith who runs Pacific Gas and Electric received a 14.5 percent raise in his base salary to $630000 but didn't receive a bonus. In 1999 Smith's compensation package totaled $1.1 million. LOAD-DATE: April 20 2001 of 78 DOCUMENTS ???????????????????The Associated Press State & Local Wire The materials in the AP file were compiled by The Associated Press. ?These materials may not be republished without the express written consent of The Associated Press. ??????????????????????April 19 2001 Thursday BC cycle SECTION: State and Regional LENGTH: 901 words HEADLINE: Top political aide discusses Bush's low-key style BYLINE: By RON FOURNIER AP White House Correspondent DATELINE: WASHINGTON BODY: ??When 24 members of a Navy spy plane crew returned to the United States after 11-days in Chinese custody President Bush was noticeably absent from their homecoming ceremonies. ??He also kept a low profile as the Senate shrank his tax-cut plan by $400 billion and had little to say about riots in Cincinnati this month. ??Such is the silent style of the new president says Bush's top political strategist Karl Rove. ??Every administration is marked in contrast to its predecessor. The previous administration felt compelled to dominate the evening news every day and the president said 'I'm focused on getting the job done' Rove said Wednesday in an Associated Press interview. ??Running a low-key presidency sets Bush apart from former President Clinton but the style has its critics. ??Some lawmakers including members of his own party said Bush could have saved more of his $1.6 trillion tax-cut plan if he had personally lobbied more lawmakers. ??Bush issued a statement expressing sympathy with police and protesters in Cincinnati but ran the risk of looking detached. ??And Rove acknowledged that there was some discussion in the White House about Bush attending the U.S. crew's homecoming to reap the public relations reward for freeing the crew. ??But the president vetoed the idea according to Rove who quoted Bush as saying I want it to be about them and I don't want to go through the discombobulation that it would require of them and their families for me to show up. ??It is not hard to imagine Clinton commanding center stage during city riots a budget battle or an international crisis but Rove said We intended to have a smaller profile than the previous administration. ??Bush's attitude is that he's not going to be measured by whether or not he gets on the evening news but on whether or not he gets progress Rove said during the 45-minute interview. ??He sat at a polished wood conference table in his West Wing office his hands folded over a memo he had discretely turned upside down. Newspapers and a Starbucks coffee mug littered his desktop. Framed photos and artwork were propped against a chair still awaiting hanging on his 89th day in the White House. ??A painting of a Texas landscape decorated one wall allowing Bush's political strategist of eight years to go on vacation whenever I'm on the phone. ??Rove is on the telephone a lot these days crafting strategies to pass the White House legislative agenda maintain GOP control of Congress in 2002 and position the president for a re-election bid in 2004. ??Bush narrowly won the White House without California's 54 electoral votes and Rove said the president could win re-election without the state but it's always nicer to carry the Golden State. ??He said the state's electricity shortage will not hurt Bush's chances in 2004 adding that the administration has done virtually everything Gov. Gray Davis has requested. ??He suggested that the state caused its own problems by not building enough power plants and failing to follow the lead of other states such as Bush's Texas to establish sound energy policies before a crisis struck. ??This has got a very human dimension to it Rove said. It's one thing to talk about power supplies. It's another thing when you talk about how it affects their jobs how it's affecting their livelihoods how it's affecting the safety of their communities and the health of their families. This is a tough issue and it ought to be a wake up call for the entire country. ??A White House task force headed by Vice President Dick Cheney is working on recommendations to address both short-term problems of soaring electricity and natural gas prices and longer-term energy supply problems focusing on producing more domestic oil and gas and building more electric power plants. ??Rove said the administration will soon unveil new conservation measures aimed at helping California ease its shortages. ??He said Bush and his political team are bringing House Republicans from politically competitive states to the White House where they discuss their districts' needs and often gain local media attention. ??Bush also plans to attend fund-raisers for House and Senate campaign committees helping the party gear up for 2002 midterm elections in which control of Congress is at stake. ??Rove also said: ??-Bush will not seek broad authority to negotiate trade treaties anytime soon allowing time to make the legislation more attractive to Democrats. You can only put so much into that pipe and we've stuffed it he said of Bush's crowded legislative agenda. The fast track authority is key to Bush's plans for a free trade zone stretching from Canada to Chile. That proposal is the focus of the three-day Summit of the Americas beginning Friday in Quebec City. ??-Americans will support Bush's environmental policies despite criticism of his decision to overturn some initiatives of the final days of the Clinton administration. Rove stopped short of accusing Clinton of setting Bush up for political troubles. I'm not certain I see a conspiracy there. I do think it's interesting that Clinton waited until the last moment to act. ??-Bush has not wavered since the campaign in his view that states should be able to opt out of minimum wage increases passed by Congress. We are not all one single labor market Rove said. GRAPHIC: AP Photo WX109 LOAD-DATE: April 20 2001 of 78 DOCUMENTS ???????????????????The Associated Press State & Local Wire The materials in the AP file were compiled by The Associated Press. ?These materials may not be republished without the express written consent of The Associated Press. ??????????????????????April 19 2001 Thursday BC cycle SECTION: State and Regional LENGTH: 727 words HEADLINE: Utility commission staff says parent company profiting from energy sales DATELINE: BOISE Idaho BODY: ??IDACORP made $66 million in profits in the past year by buying electricity on the spot market and reselling it for a higher price to its subsidiary Idaho Power Co. the staff for state utility regulators contends. ??The Idaho Public Utilities Commission staff said such profits should not come at the expense of Idaho Power ratepayers facing staggering electrical bills. ??In a report to commissioners posted on the agency's Internet site Wednesday the staff recommended Idaho Power's proposed increases for residential and commercial customers be cut by about half. ??Idaho Power seeks rate increases over the coming year totaling $227.4 million. The regulatory staff recommends a $108.7 million increase. For residential customers a requested 34-percent hike would be reduced to 16 percent. ??This is not a final decision said Jeff Beaman a spokesman for IDACORP and Idaho Power. In many cases the commissioners disagree with the staff. ??The report noted there was nothing illegal about the transactions between Idaho Power and its sister company Idaho Energy Systems. To change that the staff urged commissioners to create a mechanism that forces Idaho Power to buy electricity at the same price Idaho Energy Systems pays for it. ??The report said Idaho Energy Systems an unregulated subsidiary of IDACORP repeatedly purchased electricity on the wholesale market and then sold it to Idaho Power for a profit. ??Idaho Power officials contend the recommended policy change could financially cripple the company. It already spent $161 million buying power on the open market and cannot recover the money unless the coming year's rate is increased. ??The failure to recoup these funds could lead to liquidity problems Beaman said and that will hurt not only the company but our customers as well. ??But IDACORP paid all of its salaried staff - including Idaho Power employees - a 15-percent bonus at the end of the last fiscal year because the company had achieved record profits of $139.9 million 53 percent over the year before. ??Beaman said incentive payments have no impact on the rate request. ??Charging the higher rate between the two subsidiaries was the result of a commission order tying the price that Idaho Energy charges for wholesale electricity to the Mid-Columbia Index. The index has been pegged at unrealistic levels since the energy crisis erupted in California and fluctuates constantly. ??We are confident that the transactions were performed within the letter and spirit of the law and have not been at the expense of ratepayers Beaman said. ??Commission spokesman Gene Fadness said commissioners cannot comment on a case before them but their ultimate decision can be appealed to the Idaho Supreme Court. ??The Public Utilities Commission staff also recommended: ??- Deferring $66.1 million of Idaho Power's rate request without interest until answers are available about the company's electricity deals. ??- Deferring another $45.8 million of the request until next year when the commissioners would allow Idaho Power to collect 5-percent interest. That part of the hike was earmarked for wholesale power purchases this year - purchases that the staff believes will be much more expensive next year. ??- Cutting another $10.3 million from the increase request contending it was an error by Idaho Power's Risk Management Committee that the company planned on passing on to ratepayers. ??- Implementing a low-interest loan program to encourage energy conservation by Idaho Power customers. ??- A two-year phase-in of any rate increase ultimately approved that is substantially over 20 percent. ??- Changing residential rates to a three-tiered system to encourage savings. ??Homeowners would pay 5.52 cents per kilowatt-hour for the first 800 kwh used 6.12 cents per kwh for use between 800 kwh and 2000 kwh and 7.48 cents per kwh for use over 2000 kwh. The current residential rate of 5.2 cents per kwh. ??The staff report also took Idaho Power to task saying it was warned of the possibility of spiraling prices and power shortages as far back as 1995. ??But the company contends it did not want to build generating plants during the past decade because with electricity deregulation looming nobody knew what independent power facilities were being considered. LOAD-DATE: April 20 2001 of 78 DOCUMENTS ???????????????????The Associated Press State & Local Wire The materials in the AP file were compiled by The Associated Press. ?These materials may not be republished without the express written consent of The Associated Press. ??????????????????????April 19 2001 Thursday BC cycle SECTION: State and Regional LENGTH: 820 words HEADLINE: Legislators probe possible power natural gas collusion BYLINE: By DON THOMPSON Associated Press Writer DATELINE: SACRAMENTO BODY: ??Southern California Edison was charged about $750 million more this year for natural gas because of unchecked free-market forces an industry consultant testified. ??Paul Carpenter told the Assembly Electricity Oversight Subcommittee on Wednesday the price spikes came after the El Paso Natural Gas Co. contracted first with Dynegy and later with its own marketing affiliate El Paso Merchant Energy to control the pipeline capacity. ??Officials with El Paso and other natural gas suppliers are expected to testify Thursday that they did not illegally manipulate the market. ??The California Public Utilities Commission estimated a year ago that overcharges by the companies that control natural gas flow drove up prices by $ 100 million a year to California gas and electricity customers. ??But PUC attorney Harvey Morris said that was before last summer's price spikes which he blamed on natural gas suppliers using a monopoly to game the system. ??It's way worse than we could possibly have imagined Morris said after testifying before the subcommittee. It's obviously way higher than $100 million. ??Natural gas rates at the California border generally tracked national prices until November when they spiked as high as 11 times higher than the price of natural gas elsewhere in the nation Carpenter said. ??I have never seen gas prices like this anywhere in the world said Carpenter who has been studying the energy market for 20 years for Cambridge Mass.-based consultant The Brattle Group. The Brattle Group was hired by Edison to study the natural gas market. ??The committee is one of two legislative committees exploring whether illegal market manipulation in the electricity and natural gas markets has driven up California's energy costs. ??This is a market that is plagued by the exercise of market power Frank Wolak chairman of the California Independent System Operator's Market Surveillance Committee told the Senate Select Committee to Investigate Price Manipulation of the Wholesale Energy Market. The ISO runs the state's power grid. ??However there is no law against me saying 'I'm not going to sell to you' Wolak said. Market manipulation only becomes illegal when there is collusion Wolak said and such evidence is hard to find. ??Electricity generators and natural gas suppliers say a severe supply and demand imbalance - not market manipulation - has led to higher prices. ??Everybody's busy doing investigations. They're not interested in solving the problem said Independent Energy Producers Executive Director Jan Smutny-Jones. ??Investigations are wasting everybody's time Smutny-Jones said adding that previous probes and lawsuits have uncovered no wrongdoing. He said the state's power problems came because state regulators denied utilities the chance to sign long-term energy contracts when they had the chance. ??People have been playing by the rules Smutny-Jones said. ??But the Senate committee's first witnesses are ISO officials who authored studies that claim the state paid more than $6 billion too much for power last year. ??Committee chair Joseph Dunn D-Garden Grove also has slated state Auditor Elaine Howell who last month blamed buyers and sellers for skyrocketing electricity costs. Dunn also has scheduled future testimony from state federal academic and private investigators studying the power market. ??He invited five major generators to attend the committee's second hearing next week. All five - Reliant Dynegy Williams Energy Duke Energy and Mirant - say they are eager to cooperate and clear their names Dunn said. ??Dunn asked the five for a total of 86 specific documents. If the companies feel they cannot provide documents because of legal or confidentiality concerns Dunn said he will subpoena them. ??Smutny-Jones said investigators appear to be growing desperate to blame the state's natural gas and electricity price hikes on illegal market manipulation instead of natural market forces. ??He cited Attorney General Bill Lockyer's announcement last week that any informant who helped prove wrongdoing would be entitled to a percentage of the state's recovery he estimated could range from $50 million to hundreds of millions of dollars. ??If the state's offering a $50 million reward they haven't found anything Smutny-Jones said. I don't think you're going to find the fact that anybody did anything criminal here. ??Assemblywoman Jenny Oropeza D-Long Beach said she believes otherwise after Wednesday's testimony: I think it is very clear there was some price manipulation going on. ??But Assemblyman John Campbell R-Irvine isn't sure there was anything illegal. ??There clearly are market forces at work that's evident Campbell said. Whether you make the jump to market manipulation ... I haven't seen conclusive evidence that leads me to make that jump. LOAD-DATE: April 20 2001 What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: RE: Market Stack Body:: Eric I shall be glad to talk to you about it. The first three days of the next week would work for me. Vince What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Demand buy-down proposal Body:: The e-copy. ----------------- What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: RE: Body:: Liz It's in Stanford. We can stay at the Stanford Inn Hotel Tuesday night and leave early in the morning for Santa Fe on Wednesday. I am still waiting for Prediction to confirm their meeting on Wednesday. Vince What should this email be categorized as? [/INST] Logistic Arrangements <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Presentation to faculty and students at Berkeley Body:: FYI. I am sending Vince some materials we have used What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Confidential - May 2001 HR At A Glance Body:: Attached is the May 2001 At A Glance report. A couple of additions this month which include a section on Capital Expenditures with Pay Backs and some analysis of the recent new hire survey that we set up. Please call if you have any questions. DCL What should this email be categorized as? [/INST] Employment arrangements <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Re: Next policy committee meeting Body:: We may be able to handle this specific issue outside the policy committee but I think it would be a good idea to set the next one anyway. I'm sure we'll have something we'll need to talk about. From: Sherri Sera/ENRON@enronXgate on 06/12/2001 01:17 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: Next policy committee meeting Steve given yesterday's conversation toward the end of the executive committee - i.e. countries ENE will do business in - do you think we should try to set up another policy committee meeting? Jeff's schedule is pretty ugly for the rest of this month and early July but could probably do something mid-July. I'm not sure what Ken Lay's schedule looks like though. Please advise. Thanks SRS What should this email be categorized as? [/INST] Logistic Arrangements <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: New Congressional Report on California Body:: Ray Alvarez brought to my attention today a news item indicating that the Congressional Budget Office released a report earlier this week entitled Causes and Lessons of the California Electricity Crisis. The 30+ page report is available on the home page of the CBO's web site at www.cbo.gov. I have quickly read through the summary and it is largely favorable. For example the summary says: Much of the blame for California's electricity crisis attaches to the state's restructuring plan -- but not to its objective electricity deregulation. (...) But deregulation itself did not fail rather it was never achieved. The restructuring plan did not remove sufficient barriers on both the supply and demand sides of the market to allow competition to work -- in part because it was not designed to. Even without restructuring California's electric utilities would have faced a difficult challenge in meeting the demand for power and holding down prices in 2000. Consequently wholesale electricity prices were higher than they probably would have been in either a traditionally regulated market or a more fully deregulated market. Long-term solutions to California's electricity problems will most likely require three changes: removing barriers to the addition of generating capacity eliminating bottlenecks in the electricity transmission system and removing regulatory restrictions on the sale of power throughout the broad western market. On the negative side the report summary does state that some generators may also have withheld supplies at certain times to boost prices even more and the plan's auction system for the spot market appears to have created strong incentives for suppliers to bid strategically in a way that raised wholesale prices. What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Legislative Update -- Two Track In The Senate and House Update Body:: We face two parallel tracks in the Senate in the coming weeks between now and the start of the congressional recess for one week on June 29th. In the Senate Energy and Natural Resources Committee we will be facing efforts by pro-price caps forces who will use the committee bully pulpit to pressure FERC into more action. This effort is led by incoming chairman Bingaman with support from Majority Leader Daschle. They are saying they will consider acting on the Feinstein-Smith price cap legislation unless FERC takes unspecified additional action by the end of this month. The new track in the Senate will be in the Governmental Affairs Committee chaired by Sen. Lieberman (D-CT). While this committee does not have the legislative jurisdiction over energy that the Energy Committee does in terms of moving legislation the Governmental Affairs Committee has broad oversight and investigatory jurisdiction over all federal agencies including FERC. New chairman Lieberman held his first press conference as chairman today and said addressing high energy prices would be a priority. In that vein the committee is expected to hold a hearing on June 13 featuring some of the economists who wrote a letter in favor of price caps last month. We are checking with the Republican staff to make sure that the anti-price cap economists (the majority of the discipline of course) will also testify. We also brief committee members and staff with our arguments against price caps and the latest publicly available market data. On June 20 the committee will hold a hearing on whether FERC has properly exercised its duties under the Federal Power Act to make sure that wholesale power rates are just and reasonable. We are going to meet with the committee majority staff but we presently expect this hearing to have political witnesses (i.e. elected officials possibly including Gov. Davis). We must keep in mind that Sen. Feinstein had earlier written to Chairman Lieberman asking for a hearing on the California energy situation including relationships between FERC and those it regulates (citing the NY Times article involving Enron and Chairman Hebert). There is at present no indicationi that either hearing will address this matter. We are as you might imagine paying close attention to this situation. Over in the House Energy and Commerce Chairman Tauzin has said he will write to FERC asking them to extend the April 26 price mitigation order to the entire west and to extend it to 24/7. He also asks FERC to see if it can implement negawatts demand reduction administratively. We are in the process of obtaining a copy of the letter which has not yet been made public. Also in the House we expect congressional committees to begin marking up portions of the President's energy legislation and related topics as the month unfolds. What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Re: Chorety Crisis Body:: Thanks for the update. Congratulations on your progress. Keith Miceli@ENRON 07/24/2000 04:18 PM To: Steven J Kean@EES Mark Palmer/Corp/Enron@ENRON [email protected] cc: [email protected] Subject: Re: Chorety Crisis Steve and Mark: I arrived in the US on Saturday with a good feeling about what appears to be a successful resolution of the Chorety crisis. Under Steve Hopper's leadership the Chorety spill became a non-issue by Friday. During the crisis I collaborated with my counterpart from Shell/London Michael Megarry in developing a Key Messages and Internal Q&As document (attached). At the daily meeting/conference call there was an Operations Report from the site an analysis of the day's newspaper articles (which I handled) and discussions on how to respond to media that were reporting or airing inaccurate information that was damaging Transredes' image. I also developed a Stakeholders Action Plan (attached) for the Incident Commander to use in organizing and monitoring team member actions taken in response to stakeholder concerns. The Plan was updated daily by the Transredes PR Office and given to team members prior to every meeting/conference call. The Stakeholder Report is intended to complement the Operations Report. I also want to acknowledge the support of Karen and Dennis during the early stages of the crisis. It was extremely helpful. Regards Keith What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: WSJ: PG&Es Huge losses... Body:: Eliz -- I need your group to put together a search which captures the comments of PG&E and Edison officials in trade press anlyst reports and speeches which would be inconsistent with the idea that they can now recover their shortfall. In other words when they were trying to get AB 1890 passed when they were fighting Proposition 9 when they floated their rate reduction bonds and when they talked to analysts and rating agencies I'm sure they assumed that they would live under the rate freeze and take the risk of stranded cost recovery whithin the statutory deadline. What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Strengthening Enron as it grows Body:: Jeff I have prepared the attached chart for you. It captures the ideas we discussed last week. Please call when you have a chance. I look forward to talking with you. Kevin 213-926-2626 - STRENGTHENING ENRON AS IT GROWS.doc What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: CONFIDENTIAL Personnel issue Body:: Michelle/Lizsette I was wondering if circumstances with Jonathan Lane (the contract Help desk person whom I mentioned to you a week or so ago) have been resolved? When we last spoke I mentioned that he went to Valeria Hope's group. I am not sure of the outcome of that visit but I will tell you that his negative attitude and general dissatisfaction on the team is becoming disruptive to the other help desk members. He is away from his desk often (having meetings which may be interviews for other positions) he has shared with the other team members his perceptions of management and his issues with us. If and when I can do so I would like to terminate him. I won't until I hear from you all and we are documenting discussions as you requested. I hope this can end soon though because this is causing real problems here. Gina What should this email be categorized as? [/INST] Employment arrangements <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: RE: Governors Generator Phone calls Body:: You should also check my folder California - working group ----------------- What should this email be categorized as? [/INST] Logistic Arrangements <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: ABX1 70 Further Nail in Generators Coffin -- Absurdity in CA Body:: test What should this email be categorized as? [/INST] Empty message <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: TW Gas Sales: PRIVILEGED AND CONFIDENTIAL ATTORNEY CLIENT PRIVILEGE Body:: In anticipation of potential litigation involving TW's operational activities please prepare an analysis for me of the reasons for TW's sale of excess natural gas at the California border. I am aware of several of these sales and have been informed that excess pressure at the border is the basic reason for them. I'd like a more specific explanation that includes the following information: 1. What are the specific pressures and volume considerations that could make it operationally necessary to sell gas at the California border? 2. What is the process that is followed to make such a determination? 3. Which individuals or groups are involved in determining whether an operational sale is necessary? 4. In what way have system operations changed since last year and how do those changes contribute to the increased frequency of such sales compared to previous years? 5. What alternatives to operational sales are considered before the decision to make a sale is reached? Thanks for your attention to this request. Please give me a call to discuss and please designate your response as Privileged and Confidential Attorney Client Privileged. What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Re: Advisory council meeting Body:: fyi ----------------- What should this email be categorized as? [/INST] Logistic Arrangements <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Re: Analysis by Academics----Why De-regulation is the right policy choice Body:: I think we need some clear indication that with Hogan on the Board this is not going to turn into a diatribe about the benefits of LMP. He's the most informed of the bunch and I doubt he would find a general work of interest (unless he can create a platform for his more detailed ideas). If it stays general I think the study is a good idea. One topic area might be to explore how politicians mess up the basic idea of deregualtion and suggest that the process needs to be handled in a more objective (and pure) fashion. Jeff Dasovich Sent by: Jeff Dasovich 03/16/2001 10:54 AM To: James D Steffes/NA/Enron@Enron cc: Joe Hartsoe/Corp/Enron@ENRON Linda Robertson/NA/Enron@ENRON Richard Shapiro/NA/Enron@ENRON [email protected] Subject: Re: Analysis by Academics----Why De-regulation is the right policy choice Great points. Teece---and the lion's share of the folks on the participants list---are advocates of a minimalist role for government particularly where markets are a clear and preferably option as in the case of electricity. That said I think we're going to have to make a fundamental decision about what the goal of this study would be which will determine to a large degree whether we choose to pursue it. I'll throw out for comment the notion that the study should be designed to serve one purpose: to influence the policy decision currently under debate To de-regulate or not. As such I wouldn't see issues like PJM or APX or competitive default supplier or not or divest generation with vesting contracts or retain the assets being the focus. That debate over critically important implementation details would seem to come in Round 2 once the initial debate over deregulate or not is won. To try to do both i.e. resolve in the broad policy issue AND make the case for the specific right implementation plan would arguably bog the study down perhaps interminably. And it seems that time is of the essence in the current environment. In addition unless the fundamental policy issue is won--and won rather quickly--debating implementation may be moot. Of course it will be impossible to avoid some level of dicussion on how to do it but that would not be the emphasis. In sum I'd suggest for comment that it only makes sense to proceed---particularly since time is of the essence---if we focus on the high level policy level question of to deregulate or not and address implementation in a second or follow up study. I think we should try to make a call on this swiftly since the go/no go decision would seem to flow from resolution of this issue. Best Jeff James D Steffes 03/16/2001 08:22 AM To: Jeff Dasovich/NA/Enron@Enron cc: Jeff Dasovich/NA/Enron@Enron Joe Hartsoe/Corp/Enron@Enron Linda Robertson/NA/Enron@Enron Richard Shapiro/NA/Enron@Enron [email protected] Subject: Re: Analysis by Academics----Why De-regulation is the right policy choice Jeff -- It would be helpful to get some feedback prior to starting to deal with the fundamental question related to direct access for smaller customers. I would like to know Teece's perspective on the role of government in this marketplace. In addition I think that the paper must deal with the drawbacks of having mixed roles - utility default supply and competitive markets. Jim Jeff Dasovich Sent by: Jeff Dasovich 03/15/2001 03:11 PM To: Richard Shapiro/NA/Enron@Enron [email protected] James D Steffes/NA/Enron@Enron Joe Hartsoe/Corp/Enron@ENRON Linda Robertson/NA/Enron@ENRON cc: Subject: Analysis by Academics----Why De-regulation is the right policy choice Greetings: As I've mentioned I've been discussing with a group of academics (principally from UC Berkeley) the possibility of producing an analysis of why it makes sense to move forward toward de-regulation and makes no sense to turn back to command-and-control regulation. Clearly we're at a fork in the policy road---move forward or go back. I've (finally) gotten a proposal from the group. It's attached. Please take a look. I'd like to distribute more widely internally for comment but wanted to run it through a preliminary screen to guage whether folks think it would be useful before cluttering up folks' in-boxes with more emails to read. Few points worth mentioning: The majority of the academics that would do the report are affiliated with LECG Inc. the consulting group that I worked with prior to joing Enron. List also includes Dan McFadden UC Berkeley nobel prize winner who wrote the recent op-ed piece in the WSJ. The list also includes Hogan and Joskow and Borenstein. We could certainly exclude these folks should we choose to go forward with the analysis. However the goal is to produce a high level analysis i.e. de-regulation is good and can work command and control regulation is bad and we know that it does not work. Once the study is released (if it is pursued) the authors could tour the country testifying before federal and state bodies to advocate the virtues of de-regulation and the pitfalls of reversing course. The analysis would not be a debate over To Poolco or not to Poolco PJM etc. In this way including folks like Joskow and Hogan could offer the added benefit of creating a Nixon goes to China scenario. Please take a look at the list of participants. Again we can add to and subtract from the list. Laura Tyson would be one of the two project leaders. (The other would be David Teece Chairman of LECG.) None of the folks on the list occupies either extreme of the political spectrum. It's a mix of D's and R's who are arguably centrist economist and strong believers in markets (I won't vouch for Joskow and Hogan). The idea would be to get a wide array of industry participants from across the country to support the project. This is for two reasons: 1) the more diverse the group supporting the effort the greater the credibility and 2) they are asking for about $1 million to do the study. If you think it would be useful to pursue the study as part of our national campaign to minimize the damage created by California I would like to start immediately to approach trade associations companies customers etc. nationwide to garner support for the project. Let me know if you think the effort would be worthwhile. Appreciate your comments. Best Jeff What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Re: Philippe Body:: Yes Phillippe left to join a firm in New York -- I don't know who. Christopher Culberson <[email protected]> on 06/26/2001 02:42:53 PM To: [email protected] cc: Subject: Philippe Steven I hear Philippe is leaving for Putnam any truth to this? I've been unable to contact him directly. Thanks in advance. Best Regards Chris M. Culberson [email protected] (281) 556-8104 What should this email be categorized as? [/INST] Purely Personal <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Fw: Tagging issue at NERC Security Subcommittee tomorrow Body:: nan What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: nan Body:: I got a voicemail fro Ken. He would be happy to meet with Freeman. He is willing to work on other times but suggested the following After 3:00 on May 2nd (right after Ken's speech to the RGA) or late the day before or in the morning of the second (to do this though he would have to cancel his speech to the Texas Governor's business council but he is willing to do this if necessary) His least preferred alternative in this general time frame would be early morning on the third. Jeff -- could you coordinate with Rosie to get the time and place nailed down? What should this email be categorized as? [/INST] Logistic Arrangements <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Multi-talented Recruit Body:: nan What should this email be categorized as? [/INST] Employment arrangements <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Red Herring Article Body:: Hap -- could you provide a response and get it to Meredith. I'd like to correct this. What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: potential media calls Body:: ----------------- What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: FTC Staff Report on Electricity Restructuring Body:: Yesterday the Federal Trade Commission issued a staff report on electricity restructuring issues. It is an update of the July 2000 report done at the request of House Energy Chairman Tauzin and Subcommittee Chairman Barton. They requested the report be updated. A summary of the report and the full 80+ page text is on the FTC web site at www.ftc.gov on the upper left side of the home page. I read the summary and will read the balance. So far so good. It basically says that even states that have opened up to retail competition are in transition with a hybrid of regulation and competition thus the expected benefits of competition have not yet emerged. However the report states that nothing to date indicates that competition once the transition period is over will not produce additional benefits for consumers. The report's major conclusion is that competitive wholesale markets are important to achieving effective competition in retail markets. The summary includes something that sounds promising on RTO policy saying And as wholesale and retail markets become regional governing policies and jurisdictional approaches also must move in that direction for wholesale and retail competition to be successful. What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Re: Comments on Judge Wagners Proposed Recommendation Body:: My comments are attached. I think the pleading is well written but as you'll see from my comments I believe we should be incorporating more of the arguments from the previous pleading. Ray Alvarez 07/09/2001 07:14 PM To: James D Steffes/NA/Enron@Enron cc: Jeffrey T Hodge/Enron@EnronXGate Robert C Williams/Enron@EnronXGate Steven J Kean/NA/Enron@Enron Richard Shapiro/NA/Enron@Enron Linda Robertson/NA/Enron@ENRON Alan Comnes/Enron@EnronXGate Jeff Dasovich/NA/Enron@Enron Susan J Mara/NA/Enron@ENRON Robert Frank/NA/Enron@Enron Sarah Novosel/Corp/Enron@ENRON [email protected] Subject: Comments on Judge Wagner's Proposed Recommendation As you may be aware the Chief Judge informed the parties to the settlement proceeding this afternoon that he intends to recommend to the Commission that it employ the June 19 rate methodology for the refund period from October 2 forward. Attached are draft comments that Sarah Novosel and I propose to submit to the Judge and his legal staff tomorrow. While we would like to convince the Judge that the June 19 methodology is not appropriate we also provide a fallback approach. Please review the comments (they are only 4 pages) and send your comments to us. We plan to submit the comments tomorrow. Thanks Ray and Sarah What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Energy Issues Body:: Please see the following articles: Sac Bee Fri 7/6: Two more say Duke withheld power: The company says it was responding to the state grid operator Sac Bee Fri 7/6: Lockyer seeks SEC investigation of PG&E's financial transfers LA Times Fri 7/6: California State Seeks SEC Probe of PG&E Transfers LA Times Fri 7/6: THE NATION Little Progress on Energy Rebate Judge Hints SF Chron Fri 7/6: Davis energy team denied pay State controller says work for Edison is a conflict of interest SF Chron Fri 7/6: Ex-staff speaks out against Duke Two more charge prices manipulated SF Chron Fri 7/6: Vallejo to produce its own energy Conservation generators expected to make city self-sufficient Mercury News Fri 7/6: SEC asked to see if PG&E Corp. violated law with subsidiary Mercury News Fri 7/6: Judge may speed up electricity refund talks Mercury News Fri 7/6: Davis keeps state addicted to fossil fuels (Commentary) Chicago Trib Fri 7/6: Economics fuels power solution in California Price relief gains political support Wash. Post Fri 7/6: California Changes Stance on Refunds Two Sides Far Apart In Energy Talks WSJ Fri 7/6: U.S. Hearing Officer May Impose Pact To End California Power-Overcharge Case Two more say Duke withheld power: The company says it was responding to the state grid operator. By Kevin Yamamura Bee Capitol Bureau (Published July 6 2001) Two more former workers from a Duke Energy power plant came forward Thursday to bolster recent claims by colleagues that the power generator withheld production to drive up prices. But Duke attributed witness accounts of fluctuating generation to instructions from the state's transmission-grid operator. Richard J. Connors an auxiliary operator and E. Robert Edwards an electrician said generation units at Duke's Chula Vista plant sat idle during emergency periods for no apparent reason. Three of their former co-workers -- two mechanics and a control room operator -- told lawmakers two weeks ago that Duke had disposed of new parts and varied its production. While that testimony drew significant attention it was countered Monday by a report released by the state's Independent System Operator that showed the ISO had in fact ordered Duke's up-and-down output Jan. 16-18. On Thursday the Charlotte N.C.-based company leaned on the ISO report in its defense. The ISO could have dispatched those units at will said Duke spokesman Tom Williams referring to unused equipment. But Lt. Gov. Cruz Bustamante who has filed a lawsuit against generators contended that the ISO had based its orders on Duke's dubious bidding history. These ISO orders came only after Duke had continuously manipulated the market with price-gouging schemes forcing the ISO to regulate production Bustamante said. Connors and Edwards each worked more than 20 years at the South Bay plant in Chula Vista. For most of that time the plant was owned by San Diego Gas & Electric. Two years ago Duke purchased South Bay and retained Connors and Edwards under state-mandated agreements that ended in April. Edwards said that during power blackouts in January he saw a 225-megawatt unit off-line. Other units he said were operating far below capacity. Our No. 1 priority in life was to make money Edwards said. Williams rebutted the claims as observations from those who did not have the complete picture. It's dead on dead true that there are times when that plant is not running at full capacity and there is a Stage 3 Williams said. There may be blackouts in San Francisco. But the reason why it's not running is because the power can't move up Path 15 (a north-south bottleneck). Bustamante however maintained that Duke has continued to manipulate the market calling Connors and Edwards the tip of the iceberg in the price-gouging investigation. State Sen. Joe Dunn D-Santa Ana chairman of the Senate committee investigating price manipulation said Connors and Edwards may testify before lawmakers after further evaluation. Dunn added that his committee has talked to potential whistleblowers from other power generators who said they have seen production decreases and suspicious activities. It is undetermined whether they will testify he said. The Bee's Kevin Yamamura can be reached at (916) 326-5542 or [email protected]. Lockyer seeks SEC investigation of PG&E's financial transfers By Ed Fletcher Bee Capitol Bureau (Published July 6 2001) State Attorney General Bill Lockyer on Thursday asked the federal Securities and Exchange Commission to scrutinize financial transfers made to PG&E Corp. from its subsidiary that has filed for bankruptcy protection. SEC scrutiny is essential to protect the public interest ratepayers and the people of the state of California Lockyer said in a prepared statement. Charges that PG&E Corp. hastened the bankruptcy filing of Pacific Gas and Electric Co. have been made before responded Greg Pruett a vice president of PG&E Corp. That is an issue that has been investigated multiple times by the Public Utilities Commission earlier this year by an Assembly oversight committee and in each of these audits there has been no conclusion that the transfers were inappropriate or that they were injurious to PG&E Co. Pruett said. In its filing with the SEC the attorney general's office said that without meaningful review by the SEC it cannot be determined what impact the transfer of assets ... may have on the financial condition of the bankrupt utility. An SEC spokesman said the commission has yet to examine the petition. Among other concerns raised by Lockyer's office is the transfer of more than $4 billion from 1997 to 1999 to PG&E Corp. from PG&E Co. The majority of the $4 billion came from the sales of PG&E power plants as was required by deregulation. The bulk of the money went to pay debt that was incurred to actually build those plants Pruett said. The rest of the transfers were to pay stockholder dividends he said. PG&E filed for Chapter 11 bankruptcy protection in April after having run up $6.6 billion in debt. The Bee's Ed Fletcher can be reached at (916) 326-5548 or [email protected]. Business Financial Desk California State Seeks SEC Probe of PG&E Transfers NANCY RIVERA BROOKS ? 07/06/2001 Los Angeles Times Home Edition Page C-2 Copyright 2001 / The Times Mirror Company California Atty. Gen. Bill Lockyer on Thursday asked the Securities and Exchange Commission to investigate PG&E Corp. for potential abuses of its responsibilities as a utility holding company. At issue is a series of transactions over the last several years in which PG&E Corp. transferred funds from its utility Pacific Gas & Electric Co. which now is operating under Bankruptcy Court protection. The money--more than $4 billion since 1997--flowed to the parent company and to unregulated sister companies of the utilities. The transfers have been scrutinized by the California Public Utilities Commission and the state Legislature with no finding of wrongdoing said PG&E Corp. spokesman Greg S. Pruett. The SEC currently exempts PG&E from almost all requirements of the Public Utility Holding Company Act because the San Francisco utility operates primarily within California . That law regulates transactions between holding companies and their utility subsidiaries. Lockyer wants the SEC to withdraw PG&E's exemption citing $13 billion in PG&E assets outside of California . All the primary evils addressed by PUHCA are relevant to PG&E Corp. Lockyer's petition to the SEC stated. In Bankruptcy Court on Thursday PG&E said it is close to reaching an agreement with Calpine Corp. to pay more than $267 million it owes the San Jose-based power generator and to preserve contracts for 453 megawatts of relatively cheap electricity . In all PG&E buys about 2600 megawatts of electricity from nearly 25 alternative generators which are seeking repayment and release from their contracts through Bankruptcy Court. National Desk THE NATION Little Progress on Energy Rebate Judge Hints RICARDO ALONSO-ZALDIVAR ? 07/06/2001 Los Angeles Times Home Edition Page A-30 Copyright 2001 / The Times Mirror Company WASHINGTON -- The federal mediator seeking a settlement for billions of dollars in alleged electricity overcharges in California signaled Thursday that the talks are in trouble and analysts said hope for a deal seems to be fading. Curtis L. Wagner Jr. chief judge of the Federal Energy Regulatory Commission said he may issue a report on the closed-door talks as early as today if he sees no progress. The judge will perhaps issue a preliminary assessment of the talks said Tamara Young-Allen a spokeswoman for FERC. He will do this only if he feels the talks aren't moving along as he sees fit. Originally a preliminary report from the judge was not part of the plan. Wagner had previously said all sides would labor in private through the weekend to try to get a deal by Monday's midnight deadline. If that failed the judge said he would take seven days to craft a proposed settlement for FERC's governing board. Kit Konolige a power industry analyst with Morgan Stanley in New York said Wagner's announcement on Thursday amounted to a judicial distress signal. The judge wouldn't say something like this if the parties were close to a settlement said Konolige. I suppose he may be trying to jump-start things but I think most people believed the sides were so far apart going into the talks that it seemed like a long way to go to reach a settlement. Although Wagner has imposed a gag order on participants several people with knowledge of the negotiations said Thursday that major power generators and California officials have not budged from dug-in positions since the talks began last week. They also said the judge is extremely frustrated with the state and with several large power suppliers. California is demanding $9 billion in refunds. According to sources the generators have offered less than $1 billion. And some major power sellers are insisting they do not owe anything. Many experts say California has little hope of obtaining the $9 billion since only $5.4 billion of that is attributable to sellers under FERC's jurisdiction. On the other hand it seems clear from statements by FERC commissioners that the board is prepared to extract significant refunds from generators. Wagner is said to be probing for a compromise figure between $1 billion and $9 billion. It could take the form of a mix of cash payments and discounts on long-term contracts for power. FERC's governing board ordered Wagner to hold the talks to see if a compromise could be struck on three big issues: refunds guarantees that generators will be paid and ways to shift more of the state's power purchases to long-term contracts. The board also made clear that it would impose its own settlement if the state and power sellers were unable to come to an agreement. Wagner said Thursday that if he issues a preliminary report today he will give all the parties a chance to respond publicly on Monday. Such a report might embarrass some of the key players since Wagner is known for his plain-spoken conclusions. The judge would then prepare a settlement recommendation for the FERC board by July 16. However he also said he is willing to work through the weekend to reach a settlement if it appears within striking distance. The talks are in a large hearing room on the second floor of the FERC building near Washington's Union Station. Access is strictly controlled and special badges have been issued to the more than 140 lawyers participating. Some people with knowledge of the negotiations said Wagner's threat to issue a report may be a bid to see if one of the parties will make a move. It was like a shot across the bow said one source. * RELATED STORIES Energy savers: College students help businesses cut waste. B1 SEC probe: The state urges a review of PG&E fund transfers. C2 'No' vote: Reliant Energy workers reject union representation. C2 Davis energy team denied pay State controller says work for Edison is a conflict of interest Robert Salladay Chronicle Sacramento Bureau Friday July 6 2001 2001 San Francisco Chronicle URL: N198197.DTL Sacramento -- State Controller Kathleen Connell is refusing to pay two former Clinton- Gore campaign operatives hired by Gov. Gray Davis even though one of the consultants dropped his Southern California Edison contract amid conflict-of- interest allegations. Mark Fabiani and Chris Lehane were collectively known as the Masters of Disaster for their work in the Clinton White House during various federal investigations. They also worked for Vice President Al Gore during the 2000 presidential campaign. Because of their work for Davis Connell says the contract Fabiani and Lehane signed with Edison is a conflict of interest under state ethics rules. Davis is negotiating with Edison on a bailout for the utility. Late last week at the bottom of a press release Davis announced that Fabiani was no longer a communications consultant because his work had been successfully implemented. Lehane on the other hand has dropped his contract with Edison and signed a new agreement with Davis. Lehane's new contract includes reimbursement for travel and meal expenses which he didn't have before and requires him to work a maximum of 66 hours a month at $150 an hour. His total payments are capped at $76000 for work from June 26 to Nov. 20 2001. In his release Davis said Lehane would be paid the same amount as former communications director Phil Trounstine about $9900 a month. But Connell like Davis a Democrat said Trounstine undoubtedly worked more than 66 hours in a month for his $9990. We don't intend to be paying it Connell said of the contract for both men. They represented Southern California Edison. You have to have a singular relationship with the state of California and not show a conflict. Previously the Davis administration said there was no conflict because Edison and Davis wanted the same things out of their negotiations. Earlier this week Davis spokesman Steve Maviglio said attorneys had different opinions over whether the two consultants had violated ethics rules. Davis spokeswoman Hilary McLean said the governor had signed an executive order allowing him to enter into consulting contracts with anyone he believed could help him solve the state's energy crisis. She said Lehane had been working full-time on public policy even though his contract caps his salary. The National Tax-Limitation Committee a Sacramento group that mostly monitors legislation sued last month alleging that Fabiani and Lehane were violating the state Political Reform Act because of the Edison contract. In a recently filed disclosure statement Fabiani also listed more than $10 000 worth of consulting work for Cisco Systems another company that frequently brings issues before state authorities including Davis. The state Fair Political Practices Commission also is looking into a complaint filed by GOP Secretary of State Bill Jones that Fabiani and Lehane violated state ethics rules. E-mail Robert Salladay at [email protected]. 2001 San Francisco Chronicle ? Page?A - 3 Ex-staff speaks out against Duke Two more charge prices manipulated Robert Salladay Chronicle Sacramento Bureau Friday July 6 2001 2001 San Francisco Chronicle URL: N122949.DTL Sacramento -- Two more former employees at Duke Energy's Chula Vista power plant came forward yesterday with allegations that the company manipulated the energy market to drive up prices although they offered no hard proof and little new information. Their accusations bring to five the number of Duke plant workers who say they observed suspicious behavior including the disappearance of parts needed for repairs the idling of generators for no apparent reason and continual stopping and starting that critics of Duke suspect was designed to withhold power and artificially increase prices. E. Robert Edwards a 50-year-old electrician related one conversation with a Duke foreman sometime in January that prompted suspicion. I asked the foreman why Unit 4 wasn't running Edwards said yesterday at a press conference. We had a 225-megawatt generator sitting there and he just shrugged his shoulders and said 'I really can't tell you. I'm not privy to that information.' State lawmakers have been focusing on whether Duke manipulated prices during three days in January when the company at one point offered a single megawatt of power for a record-shattering $3880. Duke says it was following orders from the Independent System Operator which runs the state's power grid when it repeatedly turned its generators on and off during those three days. An ISO memo recently released by Duke confirms the company's contention it was under orders. But January logs from the ISO and the generators don't offer an explanation for every allegation of price manipulation since Duke has refused to release a detailed list of the prices it offered and paid during that period. The two workers who came forward yesterday Edwards and 46-year-old Richard J. Connors both worked more than 20 years in the business. They left the South Bay Plant in Chula Vista in April two years after Duke purchased it from San Diego Gas & Electric as part of deregulation. SOME SHIFTS UNPOPULAR It is true units were taken offline mostly on the weekends for whatever reason said Connors a former auxiliary operator. It got to the point as an operator that you were dreading working swing shifts on Sunday or graveyard Monday morning because you knew you were going to be running around putting units back online. Edwards said he had seen a company warehouse eventually emptied of parts that are used to repair broken generators although he didn't know where the parts went. Forcing a longer wait for repair parts was designed to dry up the power supply and push prices higher lawmakers and other investigators suspect. Edwards however admitted the warehouse was being cleaned out even when SDG&E ran the plant. Duke contends the workers weren't familiar with Duke's inventory system and couldn't possibly know why parts were being moved. Duke and other energy companies are facing scrutiny by two legislative committees a 19-member Sacramento County grand jury state Attorney General Bill Lockyer the California Public Utilities Commission and federal regulators. BUSTAMANTE ALSO SUING Lt. Gov. Cruz Bustamante who introduced Edwards and Connors yesterday also is suing a variety of generators in state court for alleged price manipulation and bad business practices. He said Edwards and Connors reiterated what we've know all along -- Duke has been gouging California consumers through its use and abuse of the South Bay Plant. Duke offers a variety of defenses for its actions during the three days in January and throughout the energy crisis. Tom Williams a spokesman for Duke said Edwards and Connors had offered nothing new yesterday. Beyond the ISO's 37 separate orders to stop and start generators during the three days in January Williams said state air regulations required the company to shut the plant at certain times because it was running out of emissions credits that limit the amount of air pollution it can put out. Duke which controls about 5 percent of the state energy market also contends the state's power transmission lines can't always handle an increase in load. Yes it's true there are times when that plant is not running at full capacity and there is a Stage Three (alert) and there may be blackouts in San Francisco Williams said. The reason why it's not running is the power cannot move up Path 15 the transmission line bottleneck near Los Banos. E-mail Robert Salladay at [email protected]. 2001 San Francisco Chronicle ? Page?A - 3 Vallejo to produce its own energy Conservation generators expected to make city self-sufficient Jason B. Johnson Chronicle Staff Writer Friday July 6 2001 2001 San Francisco Chronicle URL: N138966.DTL Vallejo leaders looking to escape mounting gas and electric bills are planning to build enough new power generators that the city government will be self-sufficient when it comes to energy. City officials said they believe that Vallejo is the first city in the nation to take such an approach. This is going to be a showplace said Scott Sossen the chief executive officer of Edge Capital Group a funding agency based in Orange County. Edge will be supervising the work along with O'Hara Energy Corp. of Nevada. The plan comes at a time when the city expects to see its energy costs double next year if it continues buying its power from PG&E. It couldn't be more timely said Mayor Tony Intintoli. Vallejo leaders are in the process of contracting with private business to build new wind solar and microturbine generators. Construction of a one- megawatt solar generator could start within 30 to 60 days. Conservation is also part of the plan and energy-efficiency improvements are already under way at Vallejo City Hall and the fire and police stations. City officials hope to add enough sources of power generation to make all city offices -- which consume about 10 megawatts a year -- self-sufficient by the end of the year. The Vallejo City Council gave tentative approval to the project late last month and will continue its discussions on the plan next week. Vallejo taxpayers won't have to pay any money in advance because Edge will finance the project's first $50 million in capital costs. In return a portion of the city's projected financial savings will be shared with the Edge and O'Hara. This is a fairly sizable project said Kevin Chambers the chief executive officer at O'Hara. Energy-efficient capital is difficult to find because it is such a new field. O'Hara is installing high-tech energy management systems at all city-owned property to reduce energy consumption. Final sites for the construction of new wind solar and microturbine generators have not been chosen. In recent years the energy bill for Vallejo city government has averaged between $2 million and $3 million per year. That includes the police and fire departments City Hall and water-pumping stations. Vallejo is part of a group of 50 local governments in Northern California that pooled their resources to buy electricity and natural gas keeping prices down. But the group's current contract expires Dec. 30. As a result the city expects its energy bill to double next year from 9.2 cents per kilowatt hour to 20 cents per kilowatt hour. It's been very positive what we've been doing and it hasn't cost us anything said City Manager David Martinez. We're going to be very optimistic that this is going to be a good thing for the city. City officials hope to eventually extend the plan to Vallejo's 4500 businesses and 37000 households. E-mail Jason B. Johnson at [email protected]. 2001 San Francisco Chronicle ? Page?A - 23 SEC asked to see if PG&E Corp. violated law with subsidiary Published Friday July 6 2001 in the San Jose Mercury News BY JENNIFER BJORHUS Mercury News California Attorney General Bill Lockyer asked the federal Securities and Exchange Commission on Thursday to step in to investigate whether PG&E Corp. violated federal law in taking billions of dollars from its bankrupt subsidiary. ``SEC scrutiny is essential to protect the public interest ratepayers and the people of the state of California'' Lockyer said in a statement. More than $4 billion flowed from the Pacific Gas & Electric utility to parent PG&E Corp. from 1997 to 1999 according to Lockyer's petition representing nearly 70 percent of the cash that flowed to the parent company during that period. PG&E Corp. spent $2.7 billion to buy back its stock $1.5 billion to pay dividends to shareholders and invested $800 million in its other subsidiaries according to the petition filed Thursday in Washington. Those figures are similar to figures from a state-ordered independent audit of PG&E Corp.'s finances released in late January. By moving assets from the utility to other businesses the company potentially harmed the utility and violated the federal Public Utility Holding Company Act in several ways according to the petition. The SEC is the nation's top cop for publicly held companies. But the commission has not reviewed PG&E Corp.'s asset movements saying the company is exempt from scrutiny under the Public Utility Holding Company Act because it's mainly a California operation and such intrastate operations are exempt. The attorney general's office argues that PG&E Corp. with more than $13 billion of its assets outside the state can no longer claim it is primarily an intrastate company. The SEC should step in it argues. The petition surprised PG&E Corp. officials who said they had no idea the attorney general's office had an issue with the company's exemption from the federal law said company spokesman Greg Pruett. Pruett said PG&E Corp.'s actions were appropriate because the federal utility law only applies if a company has one or more of the following activities in several states: electric transmission and distribution gas distribution or utility-owned generation. ``We have none of those things except in California'' Pruett said adding that the National Energy Group a PG&E Corp. affiliate ``has natural gas transmission but no distribution.'' ``The power plants that NEG owns or operates are not part of a utility and thus aren't regulated by PUCHA and it has an energy-trading arm that is also not regulated by PUCHA'' he said. The petition further asks the SEC to order PG&E Corp. to cooperate fully with the California Public Utilities Commission. The state commission is investigating whether PG&E Corp.'s corporate structure and its relationship with its bankrupt utility violate state utility regulations. The petition states it expects a response from the SEC within 60 days. But SEC spokesman John Heine said there's no statutory deadline for a response. He said he had not seen the petition and could not comment. Contact Jennifer Bjorhus at [email protected] or (408) 920-5660. Judge may speed up electricity refund talks Published Friday July 6 2001 in the San Jose Mercury News BY RICARDO ALONSO-ZALDIVAR Los Angeles Times WASHINGTON -- A federal mediator seeking a settlement for billions of dollars in alleged electricity overcharges in California signaled Thursday that the talks are in trouble. Curtis L. Wagner Jr. chief judge of the Federal Energy Regulatory Commission said he may issue a report on the closed-door talks as early as today if progress is not made. ``The judge will perhaps issue a preliminary assessment of the talks'' said Tamara Young-Allen a FERC spokeswoman. ``He will do this only if he feels the talks aren't moving along as he sees fit.'' Wagner had previously said all sides would labor in private through the weekend to try to get a deal by the deadline of Monday at midnight. If that failed the judge said he would take seven days to craft a proposed settlement for FERC's governing board. California is demanding $9 billion in refunds. According to sources the generators have offered less than $1 billion. Wagner is said to be probing for a compromise figure that could take the form of a mix of cash payments and discounts on long-term contracts for power. Davis keeps state addicted to fossil fuels Published Friday July 6 2001 in the San Jose Mercury News BY JOE COSTELLO BEFORE this year's energy ``crisis'' Gray Davis wanted to be known as the education governor. However Davis and his advisers' energy teachings have revealed alarming failures setting back state energy policy not one or two years but one or two decades. While George W. Bush proposed an energy policy tied to fossil fuels disproportionate building of centralized generation plants too little energy efficiency lowering environmental standards and increased global warming emissions Davis enacted it. First Davis has tied the state for the next decade or longer to contracts with facilities that are exclusively fossil fuel generation. Second he has encouraged an unprecedented surge in the building of new centralized fossil fuel plants. Finally he has pushed the lowering of environmental standards to increase production from the dirtiest fossil fuel facilities. The state's new energy purchasing department has spent zero on renewable generation. David Freeman the governor's energy czar giving lip service to alternatives has negotiated close to $50 billion in long-term contracts with fossil fuel generators. By comparison the governor has authorized investment of only $13 million in expanding solar generation. Photovoltaic cells produce electricity directly from the sun's energy offering a clean efficient solution to the state's future peak energy demand. While the governor talks a lot about energy efficiency the state's funding of demand programs is about 1 percent of the funding for supply. Most egregious the vast majority of state energy efficiency money is funneled back to the utilities. While environmentalists deride the Bush administration proposals in California organizations such as the Natural Resources Defense Council actively support Davis' fossil fuel energy policy. The Davis energy policy has stuck California with the same old electric system for at least the next decade. Money has literally been burned instead of invested in innovation and creation of a cleaner and more efficient system. The best hedge against price spikes is a diversity of fuel sources unfortunately California's electric system is now tied to an even greater degree to fossil fuels. After binding the state economy to the past the Davis end game is logical. Davis and his energy advisers want to spend tens of billions of dollars for the utilities' restoration -- the very companies that for so long stifled industry innovation and remain most responsible for California's energy fiasco. There is still an opportunity to make the best out of a bad situation. Instead of bailing out the utilities they should be dismantled and sold off. A combination of a dozen or so local government and publicly owned companies should be created with a goal of innovating the industry. An auction could be held that would sell customer blocks and with it the state's long-term contracts. Choice should be reinstated with the lifting of the suspension on direct access to alternative suppliers. Instead of moving the state to the next level of energy development the education governor's remedial energy teachings will force California to repeat its energy lessons. Joe Costello is an energy and communications consultant based in Larkspur. Business Economics fuels power solution in California Price relief gains political support Robert Gibbons BridgeNews ? 07/06/2001 Chicago Tribune North Sports Final N Page 3 (Copyright 2001 by the Chicago Tribune) Political pressure coming from the U.S. Congress and politicians from Western states seems to have influenced the approach to the power crisis despite opposition to price caps in the Bush administration. The Federal Energy Regulatory Commission in June expanded price mitigation measures on wholesale electricity sales in California during periods when blackouts are possible. The measures encourage generators to sell power into the state to prevent emergency alerts from being declared which trigger price caps. The move came with support growing in Congress especially among representatives of Western states on both sides of the aisle for legislation that would have capped wholesale prices in the region. The macroeconomic force may have been the difference between the $7 billion cost of power for California in 1999 and its rise to approximately $27 billion in 2000. The cost is estimated to reach between $50 billion and $70 billion in 2001. With that kind of money at stake suddenly the concern becomes less a question of who is responsible for the problem but rather how it can be solved quickly to prevent harsh political consequences. California Atty. Gen. Bill Lockyer has conducted an investigation into the actions of power generators and offered multimillion dollar rewards to whistleblowers to provide evidence of price manipulation by independent power generators. The state is seeking refunds of $8.9 billion the amount it estimates independent power generators overcharged California 's troubled utilities. The U.S. General Accounting Office has released a report criticizing the FERC for not finding evidence of power generators using plant outages to drive up prices in California . FERC's [February] study was not thorough enough to support its overall conclusion that audited companies were not physically withholding electricity supply to influence prices the GAO found. Of the major independent power generators and marketers like Reliant Energy Dynegy Duke Energy and Enron only Williams and its CEO Keith Bailey came out in April in favor of some sort of short- term price relief for California . The political dynamic out there is much more Draconian than what we're proposing Bailey told analysts in April defending Williams' position supporting some limited short-term price mitigation. What he was worried about was California Gov. Gray Davis using eminent domain powers to take over power plants and the state setting up a public power authority to build state-owned plants. Financial California Changes Stance on Refunds Two Sides Far Apart In Energy Talks Peter Behr ? 07/06/2001 The Washington Post FINAL Page E01 Copyright 2001 The Washington Post Co. All Rights Reserved California officials have abruptly shifted tactics in their attempt to recover billions of dollars in alleged overcharges for electricity saying they may reduce their demands for huge refunds if generators renegotiate $43 billion in long-term electricity contracts that the state signed this year. Gov. Gray Davis (D) said part of the $8.9 billion in refunds the state is seeking could be offset by reductions in energy prices in the long-term contracts whose costs have become a growing political embarrassment for Davis. We've made suggestions we've offered various ways in which people could get us $8.9 billion Davis told the San Jose Mercury News in a report yesterday. You can renegotiate our existing contracts and save us money. However you want to do it it's just got to net out close to $8.9 billion. The new offer was introduced this week into the closed negotiations over a California settlement being conducted in Washington by Federal Energy Regulatory Commission Judge Curtis L. Wagner Jr. according to sources close to the negotiations. Yesterday Wagner said he may issue his own preliminary finding today on the amount of overcharges if California officials and the generators cannot reach a compromise. What I'm trying to do is get people in a settlement mood Wagner told reporters. In the event we're unable to do that [Friday] at some point I may offer a preliminary assessment. The settlement conference is set to conclude on Monday. Wagner FERC's chief administrative judge has been trying to push both sides toward a compromise that would resolve the huge energy pricing controversy. Mountainous energy prices have bankrupted California 's largest utility drained billions of dollars out of the state treasury and put Davis at sword's point with generators that help keep the state's lights on. Last Friday Wagner rebuked Davis's chief representative Michael Kahn chairman of California Independent Grid Operator -- the state's power grid manager -- indicating that the state's demand for nearly $9 billion in refunds from power generators and marketers was too high sources said. Wagner's settlement conference which has involved more than 100 lawyers for all sides is closed to the public and media. Wagner complained last month that Kahn was following a political agenda and his lack of independence in the negotiations was such a joke that the parties might as well wear clown suits according to a Dow Jones report confirmed by sources close to the talks. But he has also criticized the generators and power marketers led by Reliant Energy Inc. Williams Energy Services Duke Energy and Southern Co. for failing to make serious settlement offers these sources said. The suppliers have offered to refund $600 million provided the state is able to call off various California lawsuits demanding far larger refunds sources said. Wagner's leverage is his ability to propose his own refund figure to FERC's commissioners. FERC has tentatively called for $124 million in refunds but now is taking a harder line on preventing a new escalation of California 's electricity prices this summer and is likely to be receptive to a higher refund figure some energy analysts believe. Davis's tactical change offering to make the long-term contracts part of an overall settlement comes amid growing criticism of what the state will have to pay for energy under those deals. California 's energy calamity stemmed in large part from its failed deregulation plan which relied heavily on short-term power purchases at volatile spot market prices. When energy costs shot upward last summer so did the state's electricity bills. In response Davis's aide S. David Freeman and his staff began negotiating long-term power contacts with suppliers. The $43 billion in deals signed so far would require the state to pay about $70 per hour for a megawatt of power for a large part of the electricity it will need over the next 10 years. That's well under the average of $250 per megawatt-hour that the state was paying at the beginning of this year but above current power prices -- and considerably higher than what electricity may cost in the next decade energy analysts say. A new agreement to lower those contract prices could relieve political pressure on Davis and focus settlement negotiations away from the state's controversial demand for the $8.9 billion refund. Davis will argue that reducing future power charges that his administration negotiated should count as a refund because the deals were reached under commercial duress according to sources close to Wagner's negotiations. Industry supporters say Davis's refund figure is impossible to justify. There's no benchmark for what a fair and reasonable price should be said Michael Zenger California director of Cambridge Energy Research Associates. The state's advocates counter that if FERC enforced a just and reasonable standard for power prices based on operating costs and a generous profit the overcharges by all sellers could easily reach the $9 billion figure. It's not rocket science but it does require the regulators to regulate said Frank Wolak a Stanford University economist who heads an oversight committee for the California grid. Those polar-opposite views have left both sides in Wagner's conference room billions of dollars apart as the talks approached their final weekend sources said. http://www.washingtonpost.com Contact: http://www.washingtonpost.com Politics & Policy U.S. Hearing Officer May Impose Pact To End California Power-Overcharge Case By Richard B. Schmitt ? 07/06/2001 The Wall Street Journal Page A10 (Copyright (c) 2001 Dow Jones & Company Inc.) WASHINGTON -- With settlement talks apparently stalled a federal hearing officer said he may propose his own solution to settle billions in alleged electricity overcharges tied to the California power crisis. Curtis L. Wagner Jr. said he was still optimistic California officials and several power companies could come to terms on $8.9 billion in disputed electricity charges the state has incurred over the past year. Absent more-meaningful progress he said he would offer his own preliminary assessment and recommendation as soon as today. In that event Mr. Wagner also said he would convene a hearing Monday where the two sides would be given the chance to comment on his plans. Mr. Wagner has previously indicated he feels California is due some refunds but far less than the total the state claims. California is also indebted to the power companies for billions in previous deliveries those debts could at least partially offset any refunds. Mr. Wagner has also said long-term contracts that would insulate the state from the sort of price shocks it has experienced over the past year could be part of any resolution. An administrative-law judge with the Federal Energy Regulatory Commission Mr. Wagner was named by the panel two weeks ago to broker a peace of the overcharge dispute. Commission officials have given the parties until Monday to reach an agreement behind closed doors. After that absent a settlement the commission has ordered Mr. Wagner to report back with his findings and recommendations within a week. At that point the commission has said it will impose a settlement of its own liking. The overcharge issue has been a flash point in the California debacle with the state's governor Gray Davis calling the energy companies pirates and marauders. The industry considers itself a scapegoat for a bungled state deregulation effort. What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Re: Hendricks Body:: I think we should let people in the legislature know about this and see if one or more of them can get their hands on it. From: Richard B Sanders@ECT on 05/06/2001 10:40 AM To: James D Steffes/NA/Enron@Enron Steven J Kean/NA/Enron@Enron Richard Shapiro/NA/Enron@Enron Jeff Dasovich/NA/Enron@Enron Sandra McCubbin/NA/Enron@Enron cc: Subject: Hendricks Any thoughts? What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Energy Issues Body:: Firsst article attached refers to the 1946 Nebraska case I mentioned to you= =20 in DC What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Fw: CONFIDENTIAL AND PRIVILEGED ATTORNEY-CLIENT COMMUNICATION Body:: The CAISO recently filed Amendment 30 which would provide the CAISO with the authority to engage in forward contracts/purchasing etc. to meet reliability requirements. This filing is in response to the language in the FERC San Diego Order which suggested that the FERC believes the CAISO should have this authority. Clearly this raises issues about the role of the CAISO in the forward markets as a policy matter but FERC is likely to approved this authority anyway. The CAISO Board is addressing this matter as part of its Comprehensive Market Reform Project. The CAISO Board at the September 7 meeting deferred the issues of the 2-day ahead market (as well as the policy matter of the CAISO buying forward) until the October meeting. However later during Executive Session the CAISO Board apparently approved Amendment 30. At this point in time IEP is not planning on responding to Amendment 30. This position is primarily driven by limited funds in the Restructuring/Transmission Task Force account and given the forces aligned in support taking this issue up seem problematic. Please let me know if anyone differs with this assessment and would like to see IEP comment (recognizing that funds would be required to accomplish this). ----- Original Message ----- From: Andy Brown <[email protected]> To: Steven Kelly (E-mail) <[email protected]> Katie Kaplan (E-mail) <[email protected]> <[email protected]> Cc: Douglas Kerner <[email protected]> Chris Ellison <[email protected]> Eric Janssen <[email protected]> Sent: Monday September 18 2000 3:55 PM Subject: CONFIDENTIAL AND PRIVILEGED ATTORNEY-CLIENT COMMUNICATION > Attached is a memo which briefly describes CAISO's Amendment 30 and a > potential response approach for IEP. The filing will be due October 2 > which effectively means that we must decide what IEP wants to say by the > 27th if the final draft is to be circulated to interested membership > before filing. ABB > > - 000918_IEP_mmo_CAISO_AM30.doc What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: 1:00 - 3:00 p.m. Jonathan Sallet meeting, 1801 Pennsylvania Ave @ 18th & H Body:: Washington DC. (Suite 419) you will need to dial x3360 (Louisa Asmar is his assistant) and she will meet you in the lobby area and take you upstairs. Jim and Rick will meet you there. 3:30 Meet with Dan Albert in Senator Bingaman's office (D-NM) - Hart Senate Office Building Room 703. Cynthia will meet you there. 4:00 - Meet with Representative Pallone #420 Cannon House Office Building. Cynthia will accompany you Rick and Jim will meet you there. Car will be waiting to take you to the airport. What should this email be categorized as? [/INST] Logistic Arrangements <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: job applicant Body:: any interest? What should this email be categorized as? [/INST] Employment arrangements <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Confidential Agreement Body:: This follows up on your voice mail message regarding the status of the Confidentiality Agreement in light of renewed discussions between the two companies. Attached is the latest draft of the Confidentiality Agreement which was transmitted to you on May 13. Please call me with any comments or questions. <<Confidential AGrement with Enron which was sent to Ben Rogers on 51200 - this version is a clean version accepting all blacklined changes from 59437v3.DOC>> - Confidential AGrement with Enron which was sent to Ben Rogers on 51200 - this version is a clean version accepting all blacklined changes from 59437v3.DOC What should this email be categorized as? [/INST] Document editing/checking/collaboration <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Re: Trains - Light rail Body:: Mary- Ken has been asked by Mayor Brown to chair the fundraising effort to get voter approval on a light rail referendum in Houston. My guess is that he will decline given the other demands on his schedule but I don't know that for sure. I think our respnse Mary Clark@ENRON 04/13/99 02:21 PM To: Steven J Kean/HOU/EES@EES Joe Allen/Corp/Enron@Enron cc: Mark Palmer/Corp/Enron@Enron Subject: Trains - Light rail Steve/Joe: Mark suggested that I contact you to provide a response to this employee's question (see below) to Ken and Jeff about trains and light rail. Please draft a response and send it to me. I will format it and send it to Ken and Jeff for their review. Thanks. Mary Clark ----------------- What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Re: Fellow referred to me by Ken Lay Body:: It was not mentioned to me. I'm copying rosie and vanessa to find out if this was a simple referral (in which case you should keep the work to a minimum -- return the call but don't get distracted from your other efforts) or whether Ken is especially interested in this and wants us to follow through. Jeff Dasovich Sent by: Jeff Dasovich 03/12/2001 03:54 PM To: [email protected] cc: Subject: Fellow referred to me by Ken Lay Just got a call from a fellow named Jame Edgerly at the Enterprise Zone Inc. He told me that Ken Lay (through Ken's secretary Vanessa) referred me to him. He is very interested in getting us to help him work with the Legislature to establish an Enterprise Zone energy tariff to encourage investment in California's Enterprice Zones. Before I launch on the effort just wanted to check in and see if this rings a bell with you. Thanks. Best Jeff What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: possible RTP conference Body:: ----------------- What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: RE: Marketing Plan & Meetings Body:: Sandeep This looks great. I would talk to all the heads of structuring desks including the right persons (Zimin Krishna Vasant) in the conversations. Also please talk to Andrea Reed and ask who are good targets in the EIM organization. We can talk about other targets when I get back. Vince What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Ed Segners Staff meeting, in 50M Dining Room Body:: PGE meeting -- identify alternatives Tom Hagen @ CSW Shockley would be avail on thurs or Fri or Lay What should this email be categorized as? [/INST] Logistic Arrangements <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Re: Meeting Request - July 25th Body:: Yes. Maureen - please schedule. From: Michael on 07/06/2001 03:05 AM GDT To: Steven J Kean/NA/Enron@Enron cc: Maureen McVicker/NA/Enron@Enron Subject: Meeting Request - July 25th Steve - I'll be in Houston July 23-26 and would like to get together to bring you up to date on the latest developments in Japan regarding EBS and EGM as well as energy markets. Would you have half an hour on the morning of Wednesday the 25th? Thanks Mike What should this email be categorized as? [/INST] Logistic Arrangements <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Thu evening Body:: Piotr I can pick up my E-mail messages from here. You can E-mail me with the place and location for tonight. Vince What should this email be categorized as? [/INST] Personal but in professional context <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Materials from Energy & Power Risk Conference Body:: For your information: Vince Kaminski passed on to me the following California-related presentations delivered at a recent conference he attended (Energy and Power Risk Management 5/14-5/15 Houston). Please let me know if you would like a copy of any of these: *Roach Craig (Boston Pacific Company Inc.) Price Caps: An Apparent Short-Term Solution That Creates Long-Term Problems (hard copy only) *Wolak Frank (Department of Economics Stanford Chairman Market Surveillance Ctte. CAISO) 1. What Went Wrong with California's Re-Structured Electricity Market (and How to Fix It) 2. How to Make Competitive Electricity Markets Benefit Consumers (hard copy only) *Yeres David (Partner Clifford Chance Rogers & Wells LLP) Wholesale Power Sales: A Marketplace Under Scrutiny (hard copy only) Jennifer What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Re: Government Affairs Meeting Body:: Go ahead. From: Elizabeth Linnell on 04/25/2001 04:53 PM To: Steven J Kean/NA/Enron@Enron cc: Subject: Government Affairs Meeting Do you mind if the professionals in my group attend? 5 people (assuming they all want to go - Margo Miyung Linda Lynnette and Earlene) each at $190 for airfare $380 for two hotel nights plus shuttle services and misc expenses. I'm always encouraging my group to interact with Rick's group as Gov't Affairs is our primary customer base. I'm not planning to attend the meeting. Thanks! What should this email be categorized as? [/INST] Company Business/Strategy <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: EES Body:: Please set up some time with Linda. ----------------- What should this email be categorized as? [/INST] Logistic Arrangements <s>

<s>[INST] <<SYS>> You are reviewing an email using its subject and body. Based on the text in its subject and body, please categorize this email into one of the following categories: 1. 'Company Business/Strategy' 2. 'Purely Personal' 3. 'Personal but in a professional context' 4. 'Logistic Arrangements' 5. 'Employment arrangements' 6. 'Document editing/checking/collaboration' 7. 'Empty message (due to missing attachment)' 8. 'Empty message' Please provide only one category (e.g., 'Purely Personal'). <</SYS>> Subject:: Ed Segners Staff meeting, in 50M Dining Room Body:: Reminder Craig Gannett meeting with Senator Gorton Henry Hubbard -- 207 397 5091 Steve Montovano 800 650 9084 Greg Piper Carol Dillon 503-464-8536 Kathleen -- Providence Gas (Mike McCall) Linda Clemmons -- MIT forum at MIT What should this email be categorized as? [/INST] Logistic Arrangements <s>