World News Update

United States MISO Intervenes in ComEd's Withdrawal The Midwest Independent Transmission System Operator Inc. (MISO), Indianapolis, Indiana, has filed a motion with the Federal Energy Regulatory Commission (FERC) in response to Commonwealth Edison's (ComEd) petition to withdraw from the bulk electric transmission organization.

The motion states that a public-interest standard should govern the approval of any withdrawal from the organization. It also suggests that to stabilize uncertainty in the region, the MISO could transform itself into a Midwest Transmission Coordination Authority (MTCA) that would coordinate multiple interregional transmission systems. This would allow market participants with varying business structures to use systems and resources already in place as well as those still being developed by the MISO. An MTCA structure also could dissolve seams between entities, whether they are under one single or two separate regional transmission organizations.

Argentina PSEG Global Agrees to Acquire Shares of Edeersa PSEG Global, Parsippany, New Jersey, has executed a purchase agreement to indirectly acquire 90% of Empresa Distribuidora de Electricidad de Entre Rios S.A. (Edeersa), the main electrical energy distributor in the province of Entre Rios.

Under the agreement, PSEG Global acquired approximately 41% of Edeersa at the end of 2000 and will acquire the remaining 49% in May 2001. Edeersa's employees indirectly own the additional 10% of shares not acquired by PSEG. The acquisition is valued at approximately US$200 million plus the assumption of outstanding debt, which is worth approximately US$80 million.

European Union Deregulation in Europe Spurs Competition, Growth and Risk The deregulation of natural gas, power, oil and coal markets has gained considerable momentum across most member countries of the European Union, spurring changes in those industries.

One of the key changes brought on by electricity deregulation has been a marked increase in energy asset transfers. In 1999, nearly US$10 billion worth of power generation assets were transacted. In addition, more than 200 GW of new plant capacity is under development. Almost 70,000 MW of new capacity may be needed in Europe by 2005. This boom in power plant development has increased the demand for clean natural gas to fuel generation. Two-thirds of the projected demand for gas through 2020 is attributed to electric generation. In addition, cogeneration projects have become more popular than ever, and further development of the European natural gas infrastructure likely will continue.

Industrial end users also are beginning to alter their energy-purchasing strategies to address the risks and opportunities of deregulation. Previously, multi-site industrials typically dealt only with the local utilities that served their plants, buying energy on a decentralized, site-specific basis. To stay competitive, these companies now must deploy a centrally coordinated procurement strategy that cuts across business units, commodities and countries. These companies also must take advantage of aggregation opportunities and develop price risk management strategies that match the dynamics of the market.

United Kingdom Myutility Acquires Stake In Teldata Solutions Myutility, an energy-efficiency solutions provider to small and mid-sized businesses, has purchased National Grid Group's Teldata Solutions AMR and RCS business. National Grid has invested US$3.5 million in Myutility in exchange for a strategic alliance and minority ownership stake.

Teldata Solutions will operate as a subsidiary of Myutility, but its management team and day-to-day operations will not change.

Greece Greek Energy Producer Expected to Go Public Greece's state-owned energy producer Public Power Corp. (PPC) is expected to go public in the first half of 2001. The government will retain the majority stake and the management of PPC.

Part of PPC's preparation for entering the stock market is the rescheduling of its external debt.

PPC also aims to move into the telecommunications sector. The company will bid for a fixed wireless access license through a newly established subsidiary.

United States TNPC Wins PA Customers The Pennsylvania Public Utility Commission (PUC) has approved the "Competitive Default Service Agreement" between The New Power Co. (TNPC) and PECO Energy for almost 300,000 customers.

A dispute erupted between TNPC and Green Mountain over this large number of customers in PECO Energy's service territory. Under a regulatory mandate from the Pennsylvania PUC, PECO initiated an auction for nearly 300,000 residential electricity customers who had not selected a state-registered energy service provider. This represented about 20% of PECO's residential customer base. Three energy providers placed bids for the customers with various service packages. PECO chose TNPC, which offered a fixed discount of 2% for residential customers, because PECO believed the offer was in the best interest of its customers.

Poland No Slowdown in Polish Power Privatization The pace of privatization in Poland's power sector won't change significantly, despite pressure from the government for a slowdown. The treasury will continue its policy of privatizing power generators and distributors in tandem. The Economy Ministry opposes this strategy because it fears rapid sales of power distributors will damage the prospects of generators and the unprofitable coal-mining sectors.

The privatization of eight power distributors in northern Poland should be completed by Sept. 30, 2001.

Europe Customers Poised to Embrace Digital Utility More than two-thirds of home consumers in Europe would buy nonutility offerings from their utility provider, according to independent research commissioned by Convergent Europe, a leader in utility business transformation.

The study shows that 69% of customers would consider the purchase of products and services such as travel and flights, insurance and financial products, and home appliances, should a utility company offer its customers a competitive deal.

The survey questioned more than 300 Internet-aware individuals - across the United Kingdom, Benelux, Italy and Spain - who are responsible for processing the household utility bill.

Results indicate that home consumers desire online processing and billing, with two-thirds of respondents likely to process their utility bills online within the next five years. Respondents regarded speed and convenience as the major benefits, while they saw security as the primary concern. However, 23% of consumers believe there are no drawbacks to processing bills online.

A massive 87% of respondents in the survey claimed that price would be an incentive when choosing a new supplier. However, brand is also an issue, with nearly two-thirds of the people interviewed giving the company name relevance in the decision.

The research also revealed that home consumers supported a one-stop shopping option, with 64% of respondents claiming they would be more likely to select a utility offering multiple utility services if it could be done via the Internet. In addition, the majority of utility customers would prefer getting all of their services and products from one energy company.

United States EPRI Identifies Security Threats to Energy Industry Hackers, disgruntled employees and contractors, and cyber terrorists have easy access to the electronic systems that run the nation's power plants and transmission grids. At the same time, newer hacker tools require less computer knowledge to do damage. EPRI's Enterprise Infrastructure Security Initiative (EIS), launched in early 2000, has examined the particular threats and vulnerabilities of the power industry's electronic infrastructure and is working to help mitigate some of the weaknesses.

Although significant efforts have been made to protect Internet and e-commerce-type applications, the same security was not built into many plant and T&D computer systems. In its initial year of operation, the EIS program set the stage for more detailed development of security awareness by providing a basic understanding of electronic security and the status of power industry systems with respect to security.

In 2001, EIS will help members develop more robust electronic security programs. Workshops and reports will give special attention to the secure integration of corporate business systems with operations systems. "Vendor teams" that include representatives from member companies will work with representatives of key power industry vendors to develop electronic security features and specifications for existing and new products.

The next workshop for EIS members will focus on risk assessment and vulnerability. In addition, a special workshop for non-members will recap lessons learned about system vulnerabilities and review government mandates to secure the country's critical infrastructure.

United States TNPC Wins Pennsylvania Customers The Pennsylvania Public Utility Commission (PUC) has approved the "Competitive Default Service Agreement" between The New Power Co. (TNPC) and PECO Energy for almost 300,000 customers.

A dispute erupted between TNPC and Green Mountain over this large number of customers in PECO Energy's service territory. Under a regulatory mandate from the Pennsylvania PUC, PECO initiated an auction for the approximately 300,000 residential electricity customers who had not selected a competitive energy service provider registered within the state. This represented about 20% of PECO's residential customer base. Three energy providers - TNPC, Green Mountain and one unidentified company - bid for the customers with various service packages. PECO chose TNPC, which offered a fixed discount of 2% for residential customers, because PECO believed the offer was in the best interest of its customers.

United States Alliant Energy-Wisconsin Power and Light (WP&L), Madison, Wisconsin, has partnered with National By-Products to construct a new landfill gas-fuel electric generating facility at a Berlin, Wisconsin landfill. The new project will increase the state's supply of renewable energy by 2.4 MW - enough electricity to supply approximately 500 homes. Alliant Energy will own, operate and maintain the generation equipment.

The utility will begin installing three 800-Kw generators at a landfill adjacent to the rendering company's property upon receipt of construction permits from the Wisconsin Dept. of Natural Resources. The generators will be fueled by the landfill's naturally produced methane. The new facility is on schedule to begin generating power by May and continue to produce electricity from this renewable energy source for at least 20 years. WP&L will own and operate this new plant.

National By-Products will receive the methane from a nearby landfill operated by Waste Management Inc. and sell the fuel to WP&L. The electricity generated will help the utility comply with a state law requiring it to procure at least 11 MW of renewable energy capacity. Any additional output from this and WP&L's other new renewable facilities will be marketed through WP&L's voluntary Second Nature program, sold to marketers or used in wholesale green energy contracts. Second Nature will provide the company's customers with an opportunity to purchase electricity from renewable resources.

United States BPA Must Purchase More Power, Adjust Rates Customer demand under new 10-year wholesale power contracts with the Bonneville Power Administration is so strong that the agency must purchase power on the market to augment its supply.

To recover the cost of these purchases, the agency proposed adding a 15% charge onto wholesale rates that go into effect Oct. 1, 2001. This is being done through proposed revisions to the agency's Cost Recovery Adjustment Clause (CRAC).

Even with an additional charge, BPA's wholesale rates are well-below wholesale market prices currently forecast for the next five years on the west Coast, BPA officials said.

BPA has signed new wholesale contracts with more than 130 Northwest utilities and industries, most of them for 10 years. Those agreements pushed the agency's total firm energy load - the amount of energy BPA must supply - up to 11,000 MW. This is more than earlier agency predictions and almost 3000 more than the federal Columbia River Power System can generate on a firm basis.

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