Federal Government uses UPLAN model to examine price volatility in ERCOT

LCG, October 11, 2022--The U.S. Energy Information Administration, or EIA, released its latest supplement to the Short-Term Energy Outlook (STEO) in the Texas market, assessing various possible scenarios using LCG’s UPLAN NPM model, with a special focus on the effects on wholesale power prices and market conditions.

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Michigan Governor Supports Reopening Palisades Nuclear Facility

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Industry News

Enron India May Disconnect Maharashtra State

Directors of Dabhol Power Co. meeting in London yesterday authorized management of the firm, 65 percent owned by U.S. Enron Corp., to terminate its contracts to sell power to India's Maharashtra State.

The board's decision follows repeated failures on the part of the state-owned utility, Maharashtra State Electricity Board, to pay its monthly electric bill to Dabhol. The action empowers Dabhol management to discontinue service to the MSEB at any time.

Indian officials, however, perceive the board's action as just another gambit in an ongoing dispute over the cost of power, even though a power purchase agreement was executed in 1993 and renegotiated in November 1995.

In May of 1996, the Indian federal government extended its sovereign guarantee to the Dabhol project, agreeing to underwrite any defaults by the MSEB.

Contracts in India are not accorded the same respect as they are in Western nations, and the terms of contracts are likely to be misstated for political purposes. Dabhol is a 2,184 megawatt power project, 740 megawatts of which are on line, with the balance due for completion later this year. The investment by Enron and its co-owners and lenders exceeds $3 billion.

Yesterday, Maharashtra chief minister Voliasrao Deshmukh told The Economic Times "The state was not in favor of terminating the U.S. energy major Enron-promoted Dabhol Power Co.'s $900 million power project, but instead it wants to work out an amicable solution for solving the imbroglio."

Enron might be forgiven for feeling the "imbroglio" would be solved if Maharashtra paid for the electricity it gets from Dabhol and that a lot more than $900 million is involved. Moreover, Enron did not promote the Dabhol project in May of 1992, the Indian government invited Enron Corp. to explore the possibility of building a large power plant in Maharashtra. The U.S. company may be sorry it bought the air fare.

Maharashtra had threatened earlier this month to scrap the project, but The Economic Times said this was "back channel" diplomacy initiated by a veteran politician, Sharad Pawar.

Now, both India and the state of Maharashtra want to renegotiate the power purchase agreement between the MSEB and Dabhol, which means they want to pay less for power than they had previously agreed to pay. Enron would probably accept a lower tariff, if the bills were paid promptly in U.S. dollars.

The Dabhol project is the largest single foreign investment in India, and observers are unanimous that failure of the project at this stage would severely limit India's chances of attracting further investment from Western companies.

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