RE: Wonder if its off the balance sheet? ,
 They all have it now. I thought you would enjoy this one.

Did you hear about the protest in Enron's Chicago office.  40 ACORN members 
stormed in, demanding that Gregg Penman fax a letter to Ken Lay.  No kidding.

ckm


From: Ben Jacoby/ENRON@enronXgate on 05/24/2001 04:08 PM
To: Kay Mann/Corp/Enron@Enron
cc:  

Subject: RE: Wonder if its off the balance sheet?

How about forward ing this article to legal / finance / accounting, with the 
theme being that our Pompano site on a relative basis is a cake walk. I'd 
like to see Duke's financial model...


-----Original Message-----
From: Mann, Kay
Sent: Thu 5/24/2001 1:19 PM
To: Jacoby, Ben; Carnahan, Kathleen; Sole, Carlos; Engeldorf, Roseann; Gray, 
Barbara
Cc: 
Subject: Wonder if its off the balance sheet?



Duke Energy, Environmentalists Strike Deal over California Plant 
Tom Knudson 

May. 16, 2001 
Knight Ridder Tribune Business News - KRTBN 
Copyright (C) 2001 KRTBN Knight Ridder Tribune Business News; Source: World 
Reporter (TM) 

Days after state regulators gave Duke Energy the go-ahead to expand its Moss 
Landing Power Plant near Monterey Bay last fall, documents show four 
environmental groups made their own deal with the utility giant. The four 
signed an agreement not to "participate in any lawsuit (or) regulatory 
challenge" that might slow or stop the project in exchange for a financial 
concession: $1 million from Duke for environmental "monitoring and research." 

Balancing power generation and environmental protection always has been 
difficult. But today, as power-starved California scrambles to find and 
permit new energy sources, some fear the Moss Landing agreement shows that 
money can sway even environmentalists -- and tip the scales too far in favor 
of economic development.

Environmentalists who signed the agreement, though, said that despite their 
concerns about the plant expansion, they had little chance of stopping it, 
especially after it was approved by the California Energy Commission and 
Central Coast Regional Water Quality Control Board.

So they took the potentially controversial step: entering into an agreement 
with Duke for financial resources to pay for studies of the plant's impact on 
the marine environment.

Other environmentalists, though, criticized that approach.

Duke Energy's efforts to modernize the Moss Landing Power Plant resulted in 
mitigation payments to environmental and other groups, including:

$7 million to the Elkhorn Slough Foundation to mitigate the plant's use of 
seawater.

$425,000 to the Monterey Bay Sanctuary Foundation over three years to monitor 
heated seawater discharge in the ocean.

$1 million to the Monterey Bay Sanctuary Foundation over five years to 
monitor water quality through a program sponsored by Save Our Shores, the 
Center for Marine Conservation, the Friends of the Sea Otter and the Otter 
Project.

$100,000 to the Marine Mammal Center to relocate its triage center for 
injured animals onto power plant property.

$3.4 million to the Moss Landing Chamber of Commerce over 20 years for 
infrastructure improvements in the Moss Landing community.

$100,000 to design and construct a boardwalk for additional beach access in 
Moss Landing.

$60,000 for an environmental assessment for a proposed Elkhorn Slough Circle 
Trail. If approved, Duke would provide an additional $250,000 endowment to 
maintain the trail.

"It is very disheartening," said Carolyn Nielson, a retired teacher who along 
with some other local residents is waging a battle against what they consider 
an environmentally harmful power plant cooling system.

"These environmental groups have the expertise, the biologists, the 
attorneys," said Nielson, who has taken her case to the State Water Resources 
Control Board. "We could have been much more successful with their help. But 
there wouldn't have been any financial reward in it for them."

Such criticisms are off-base, according to Warner Chabot, regional director 
for the Center for Marine Conservation, a national environmental group that 
was among those to sign the deal. He said environmentalists got the best deal 
possible in the current energy climate.

"Look at what's happening with power plant approvals in California right 
now," said Chabot, referring to the state's push to bring new energy sources 
on line.

The Moss Landing project -- which is scheduled to add 1,060 megawatts in 
2002, enough to serve one million homes -- is a key part of that energy 
expansion plan.

No money will go to the four environmental groups -- the Center for Marine 
Conservation, along with Save Our Shores, Friends of the Sea Otter and the 
Otter Project. It will be routed, in five yearly installments of $200,000 
each, to the Monterey Bay Sanctuary Foundation, a nonprofit organization that 
helps support sanctuary programs, including scientific research.

Chabot helped found the sanctuary foundation and sits on its board. He said 
the money will be used to monitor the health of Elkhorn Slough, a 
biologically rich estuary that borders the plant and is linked to Monterey 
Bay.

"Not a dime comes to the Center for Marine Conservation," he said. "Not a 
penny comes to me."

Duke representatives said the controversy about the arrangement has been 
stirred by a handful of people.

"It's a million dollars worth of water quality studies," said Duke spokesman 
Tom Williams. "Our whole effort wasn't to try to buy anybody off. It was 
designed to help increase people's comfort level where there wasn't a comfort 
level."

The $1 million agreement signed in November is part of a package of more than 
$12 million in Duke payments to civil, government and environmental groups in 
connection with the plant modernization.

The heftiest award -- $7 million to the Elkhorn Slough Foundation, a 
nonprofit environmental organization -- was negotiated by state agencies to 
"mitigate" environmental impacts of the plant.

Formed in 1982, the slough foundation exists to promote "the wise use and 
conservation of Elkhorn Slough and surrounding wetlands," its Web site says. 
However, some environmentalists say the state-approved mitigation plan is 
inadequate.

"If you want to say, 'Who did Duke roll with a big chunk of money?' I would 
say they rolled the California Energy Commission and the Regional Water Board 
for the price of mitigation," Chabot said. "The agencies got bought off 
cheap. And the environment got taken to the cleaners."

Duke's Williams strongly disagreed. Environmental mitigation "must be based 
on science, not on buying anybody off," he said. "That is inappropriate, and 
we would not participate in that.

"That suggestion is offensive to us. And it should be offensive to any 
environmentalist."

Bob Haussler, head of the Energy Commission's environmental protection 
office, said the mitigation plan is biologically sound. "We are confident it 
will improve the slough ecosystem," he said.

Madeline Clark, a local businesswoman and founder of Monterey Parkway -- a 
citizens group that scrutinizes local public works projects -- called the 
recipients of Duke's payments a "shopping list" of government agencies, 
environmental groups and civic organizations. She was particularly critical 
of the $1 million deal with environmental groups.

"You know what bothers me?" Clark said. "Environmental groups get tons of 
donations. Their purpose is to protect and defend the environment. If a big 
corporation like Duke can come in and buy them off, I have a real problem 
with that."

Construction began in November on Duke's project to add 1,060 megawatts of 
natural gas-fired electrical capacity to the Moss Landing plant, purchased 
from PG&E in 1998.

If the expansion is finished next year, as scheduled, it would account for 
more than 30 percent of all new generation in California in 2002.

"This is a big deal," said Williams, the Duke spokesman. "It will be the 
largest plant in California. If that plant is delayed a month or two, we lose 
the summer of 2002. And that affects not only Duke Energy, but the state of 
California."

Opponents say it's not the power they oppose, but the plant's cooling system, 
which will pump about 1.2 billion gallons of seawater each day from Moss 
Landing Harbor. Such pumping, they say, will degrade Elkhorn Slough. They 
argue for an alternative cooling system, such as towers that re-circulate 
water.

"Basically, what that plant will do is take 25 percent of the volume of the 
harbor and slough, run it through a pipe and dump it back into the ocean with 
much of the marine life cooked and dead," said Steve Shimek, executive 
director of the Otter Project.

For Shimek and other environmentalists, scientific studies commissioned by 
Duke during the permitting process left key questions unanswered about the 
plant's impact on the environment.

"There was no scientific evidence that would literally point to Duke causing 
harm to the environment," said Vicki Nichols, executive director of Save Our 
Shores. "We felt we didn't have strong standing to sue."

Instead, the environmentalists began negotiating with Duke for financial 
payments for studies of environmental impacts of the modernization project.

The process "gave me tremendous pause and great concern," Nichols said. "I 
knew there was going to be some perception that we were doing the wrong 
thing."

She was right.

"As far as I'm concerned, with the price-gouging going on by the energy 
wholesalers, they are just receiving stolen goods," said Clark, of the 
citizens group.

Her skepticism was sharpened by the recent disclosure that Duke Energy 
approached Gov. Gray Davis with a secret deal offering financial concessions 
if the state dropped lawsuits and investigations into the power generator.

Chabot, with the Center for Marine Conservation, discouraged any comparison 
between the two offers, calling it "grossly unfair and inaccurate."

Regardless of what was intended with the payments, Nielson said they stain 
the process. "It is so destructive in terms of making everyone cynical," she 
said.

Shimek took a different view. "We convinced Duke to spend $1 million toward 
monitoring that, frankly, five years from now could very well come back to 
haunt them," he said.

"Did we do the right thing? I have no idea. Did we try our best? Yes, we 
did."
ben.jacoby@enron.com